What if the retailer goes bust?

This article discusses buying appliances online but is equally relevant to buying in a store. Even in the best of times I tend to use a credit card because of the extra protection, and sometimes free insurance that comes with them, but the economy is in turmoil at the moment so it’s more important than ever. Household names are disappearing without warning and I’m reading headlines about thousands of customers losing their money when goods they have ordered have not arrived before the administrators have been called in.

So it’s a good time to remember that if buying goods online, or even in store, you should always try to use a credit card. Even if you have the money in the bank and can pay by switch, always try to use a credit card because you can claim your money back if you do not receive the goods. This protection is not available for debit cards and switch cards.

I read an article about Empire Direct which said that around 5,800 customers were waiting for goods that never arrived and looked like never receiving them. Out of the 5,800, it is believed that 4,000 paid by credit card and should therefore get their money re-funded. This means 1,800 customers paid by either cash, cheque, or debit card and are not likely to receive either their goods or their money back.

What about consumer rights if retailer has ceased trading?

It’s a complicated issue, with various permutations. It’s covered well in the free downloadable PDF booklet from the Citizens Advice Bureau. Supplier has gone out of business (Citizens Advice Bureau (pdf) downloadable booklet )

Here’s a link to a great site which explains the full Section 75 law which means your credit card company must protect anything you buy over £100 – for free.

Please read the above linked article carefully – especially the section entitled, “are there any exceptions?” This is because if you pay through a third party such as Paypal instead of paying the retailer direct section 75 does not apply. These third party companies do usually have their own protection schemes – though they may not be as strong. However, if payment using PayPal goes directly to the seller we may still have some protection under section 75, check with PayPal.

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