Issuers weak on card claim advice


Consumers who contact their credit card company for advice about making a claim are often given incorrect information, new research suggests. The latest study by consumer watchdog Which? found that in the majority of cases, customers did not receive the information they needed. Here, takes a look at the findings and provides some tips on credit card claims.


Customers getting incorrect advice
The majority of credit card companies give consumers incorrect or misleading information when they ask about claiming for goods they have bought, according to an undercover investigation by consumer watchdog Which? Mystery shoppers made 120 calls to the UK's 12 biggest credit card providers to find out about making a claim.

Which? found that in the majority of cases (71), investigators were not given useful or correct advice. Just 10 advisers mentioned section 75 of the Consumer Credit Act, which holds the card provider equally responsible along with the retailer for the goods or services purchased. Of those advisers who did mention section 75, just one gave the correct money limits for claims, which must be between £100 and £30,000.

Credit card companies also slipped up when asked who to contact next. One well-known high-street bank told a caller to contact the Ministry of Justice; another leading card provider suggested the local authority; and yet another advised a caller to contact ATOL -- the insurance scheme that covers airline failure -- about their claim for an undelivered sofa.

Which? chief executive Peter Vicary-Smith described the findings as "unacceptable." He said: "Companies must accept that advice really matters. Consumers are potentially missing out on money they're owed because they've been misinformed. The industry must know the rules, and it shouldn't be up to the consumer to remind them of their rights."

Guidance in brief
Credit card holders should acquaint themselves with the key facts about section 75 of the Consumer Credit Act in the event that a card purchase goes wrong. The legislation makes the card company 'jointly and severally liable' for any breach of contract or misrepresentation. It includes purchases made online or while overseas and is particularly useful in cases where the trader has gone out of business or fails to respond.

Customers who wish to make a claim should write to their card provider explaining the problem, detailing the product or service that was purchased or ordered, and providing the date and details of the transaction. Customers should receive a response within about 14 days and can refer the problem to the Financial Ombudsman Service if they get no reply or are unhappy with the response. As a final resort, customers can start court action, although this is a more complex procedure and can be costly. While there is no time limit for making a claim, there is a six-year limit on pursuing the matter in court.

Claims for smaller purchases
Section 75 only applies to purchases costing more than £100 and up to £30,000, but there is another option for cheaper items and services, called a chargeback. This industry-backed scheme allows consumers to reverse transactions if they are unhappy with a product or have fallen foul of fraudsters. It is particularly useful for small debit card purchases, but claims must be made within 120 days of the problem becoming apparent.

See related: How to get your credit report, score, Britons careless with credit card pins

Published: 10 February 2011