Credit card purchase protection

Following the release of the John Lewis advert we are officially in the holiday period, which of course means the race is on to buy gifts for family and friends. So, assuming you’re not super organized you likely still have quite a few bits left on your list to tick off – for which CBW’s Corporate Recovery & Insolvency (CR&I) team would like to give you some advice!

As most of us are feeling the pinch from increased inflation rates and the rising cost of living, the last thing we want is for our online Christmas shopping orders to not turn up, and, here’s the really bad bit, not be able to get our money back. This is a real problem for many online shoppers at the moment and is becoming more and more common.

So why is this happening? For online businesses, it could be from deliveries going missing with the uncertainty surrounding postal strikes, combined with the fact that many businesses are struggling to adapt to the rapidly changing economic environment.

We’ve seen this recently with Made.com, who went into administration and were not able to fulfil orders – leaving people unable to receive refunds on orders of thousands of pounds.

The best thing you can do to protect yourself from this situation is to use your credit card for online purchases over £100.

What protection do you receive?

Using a credit card shares the liability with the credit card company, meaning that should anything go wrong with the order, or if the company ‘goes under’ you can claim your money back.

Under Section 75 of the Consumer Credit Act, this covers single items between £100 – £30,000, in the case that:

• The seller goes out of business before receiving your order, or;
• The order is undelivered or damaged and you are unable to receive a refund from the seller.

If the normal routes of receiving a refund are unsuccessful, contact your credit card company to make the claim and state that a claim is being made under Section 75 of the Consumer Credit Act. Include any receipts and correspondence with the company as proof of purchase and evidence that the company are refusing to give you a refund.

Debit cards do not provide this protection, however purchases under £100 are eligible for ‘Chargeback’. This is not legally backed but is included in ‘Rules of Conduct’ which most banks abide by.

Risks with credit cards

It is important to highlight the risks of using credit cards, with repayments and interest being the main points.

Firstly, as any payments on the credit card are borrowed money, ensure that this is within your personal means. Secondly, pay the full balance off each month to avoid interest charges being added on.

Protect yourself

Within the CR&I team we are noticing an increase in companies who are coming to us with solvency issues. Even though it is our focus to remedy the situation in the first instance, for many, insolvency proceedings are unfortunately the only option.

With this simple change you could save thousands of pounds, should anything unforeseen happen. So, protect yourself as you crack on with your Christmas shopping, but also into 2023, as times will undoubtedly remain unstable.