I apologise in advance for saying this. But next week it’s October and that means we are approaching the season of… Shopping.

Sadly, it’s also the season of scammers too. So knowing how to get your money back if things go wrong with a purchase is vital if you want to shop safely. However, this all depends on how you’ve paid for goods or services, as some methods offer more protection than others.

This is because the way we pay for things has transformed so much in recent years that the existing laws we have that protect our rights have struggled to keep up. Just a decade ago, few people appreciated how young start-ups like PayPal would grow to dominate the way many of us pay for things online. Or that contactless payments would free us from the curse of bulky wallets and purses.

Yet the cost-of-living crisis has also served as a reminder that more traditional methods of payment are not dying off. The latest report from UK Finance shows that the number of cash payments made in 2022 increased to 6.4 billion, though the overall amount actually spent was down, suggesting people are returning to using cash as a budgeting tool as belts get tighter. And as for cheques (ask your grandparents), though still in decline, 129 million were issued in 2022 – a huge sum for a payment method many dismissed as dead two decades ago.

With so many things to watch out for – and so many different ways to pay – what are the chances of getting your money back if things go wrong? Here’s my guide.

What are my rights if I pay by debit card?

Debit cards are the most popular way to pay for things in the UK, with transactions increasing by 18% last year to over 23 billion payments.

There are two words to remember if you’ve paid for goods or services with a debit (or a credit) card: ‘charge back’.

I often mention charge back in this column but it’s worth repeating. If you’ve been tricked or conned, things you’ve bought haven’t turned up, a firm looks like it’s going to go under or a long-promised refund for a retailer has not materialised, you can call your card provider and ask them to charge back the money.

This is an industry-run scheme, so it’s not the law, but it is considered to be ‘good practice’ – so you can go to the Financial Ombudsman about disputes if you’re not happy.  As with everything though, there are caveats. There are time limits for making a claim, usually 120 days from the date you make your purchase (this varies with some card providers). In addition, many complaints over the quality of goods can be subjective. If it’s not straightforward, you might get sent back to the retailer to sort out the problem. Chargeback won’t generally work when a retailer has officially gone bust, but if you’re reading (this) website and it looks like a business will go under and you get your charge back request in quickly, you might get lucky.

What are my rights if I pay by credit card?

In addition to the wonders of charge back, the best way you can protect your purchases is to pay on a credit card. However, only if:

  • You spent over £100 and under £30,000.
  • You pay off the debt before interest is applied (usually at the end of the month).

Under the Consumer Credit Act, you can claim your money back from your card provider using what’s known as a ‘section 75’ claim if the goods are misrepresented, don’t work or don’t turn up.

At Times Money Mentor, section 75 is one of our favourite and most useful bits of consumer legislation. Check out our guide here: [link]

Once again though, there are caveats and catches aplenty.

The most common and complicated clause in the act known as the ‘debtor-creditor-supplier’ agreement. I won’t bore you with the details here, but in short, you can only make a claim from the card provider if you bought the goods or services direct from the retailer. This may seem straightforward, but if you buy via a third-party site, like an online travel marketplace, or even using PayPal, then you are likely to not be covered by section 75 protection. I say ‘likely’ because this is very much under debate right now with a consultation on the reform of the law underway, but if in doubt, buy direct.

What are my rights if I pay for goods or services by a bank transfer?

Online banking has made bank transfers incredibly easy, with many people using their phones to transfer cash or buy things each day. The finance industry loves to give new names to various banking services, so you’ll often see this referred to as ‘remote banking’ – but basically, it’s making transfers from your account online, through your phone or through an app. The number of bank transfer/remote banking payments increased by 17% in 2022, hitting 4.3 billion payments.

But beware! Bank transfers are the favourite method scammers use to part you from your cash, because once you’ve transferred the money, it’s much harder to get back.  If you remember all of those horror stories you’ve heard about people being tricked by fraudsters in to transferring huge amounts of money out of their accounts, it’s usually by remote banking. As soon as the money hits the fraudsters account, the cash is syphoned off in smaller chunks to other accounts, never to be seen again. It’s not the end of the world. There is a (very) small window of opportunity to call your bank and get the cash back. But speed is of the essence.

So why can’t banks recall your cash even for smaller amounts, if you think you’ve been tricked? It’s because when you transfer money, there’s often no way to prove that it’s not actually a genuine transaction and you’ve simply decided to back out of the agreement.

You should always speak to your bank as soon as you realise you’ve been tricked. Even if you’ve sent money to the wrong account by accident – the so called ‘fat finger fail’ – there may be occasions where they can speak to the other bank on your behalf to see if the money can be returned. But as a general rule, only use bank transfers to pay money to people you know. And don’t click through all the warnings online without reading them.

What are my rights if I pay using PayPal or other e-payment services?

E-payment services act as a protected way to make payments between you and a retailer. They rose in popularity as a way to buy and sell goods with individuals and smaller businesses who don’t want the faff and the expense of paying to process debit and credit cards. But thanks to their encryption and anti-fraud measures, they are enormously popular. E-payment services are regulated and complaints are dealt with through their own dispute resolution schemes.

However, there are lots of complaints about these dispute resolution schemes and some of the more ‘eccentric’ rules, like freezing accounts without explanation or spending months investigating some complaints. Nethertheless, paying using an e-payment business gives you more protection than you’d get from making a bank transfer.

There are still ways that fraudsters can play the system though. PayPal’s ‘friends and family’ option, is a way for you to transfer money to those close to you but without the processing fees.  However, this type of payment works in the same way as a bank transfer. So when the money has gone, it’s gone – and it’s not covered by PayPal’s dispute resolution service, leaving you nowhere to turn.  Many scammers try to trick people to use the friends and family function to make payments for goods, so beware of anyone asking you to do this.

What are my rights if I pay by cash, cheque or wire transfer?

If you use an international transfer service like Western Union, wave goodbye to that money, because once you’ve sent it, it’s not coming back. This method of transfer is beloved of fraudsters, often in scams that suggest friends or family members are in trouble or stuck abroad. Be wary.

Cash may be making a resurgence, but remember that you can’t prove you made a purchase unless you retain a receipt. Keep an eye on that change too for foreign or fake coins or notes.

If you’ve not banked a cheque for a while, you may be surprised to learn that thanks to the ‘Image Clearing System’ (ICS) you can actually use a photo or scan of your cheque to pay the item in to your account. But loads of retail scams rely on the traditional clearing system, which means if you release goods you’ve sold before a cheque has officially cleared, then you could lose the cash. The clearing cycle is known as the 2-4-6 system:

  • After the first two days you start earning interest.
  • Four days after depositing you can withdraw and spend the cash.
  • But it’s not until day six that you can be sure the cheque has cleared.

But cheques are not a good way to buy or sell goods from or with strangers. Stick one in a Christmas card instead and confuse the kids.

Featured in Times Money Mentor – Martyn James


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