Today it was announced that two of the major retailers in the UK have gone into insolvent administration. If Woolworths and MFI are in such serious trouble what hope is there for other High Street and out-of-town retailers like Dixons, Currys, Staples, PC World etc?
The problem for small businesses and consumers is that many suppliers like those noted above require payment with orders. If you place and pay for an order before getting the goods or services you will be out of pocket.

The same is true if you book travel with many of the budget airlines – something that many businesses have been doing because it is so much cheaper. If I mention the recent failures of EuroManx, Zoom, XL Airways, Silverjet, Eos, MAXjet and Sterling you will see what I mean.

With many retailers currently marking down prices, there has never been a better time to bag a bargain, especially on big-ticket items. But what happens if goods with long order times, such as TV’s and dishwashers, never arrive and what can you do to protect yourself?

Well, when purchasing anything over £100 and under £30,000 make sure that you use a credit card rather than a debit card. Under Section 75 of the Consumer Credit Act, if anything goes wrong with your purchase then the credit card company must take responsibility.

This means if the company you order from suddenly goes kaput or your items get lost in the post then you can claim back the money from the credit card company.

An important thing to note is that even if you only pay for part of the item by card, provided that what you pay for costs more than £100 and less than £30,000, you are protected for the whole item. The law also specifies that you are protected for the item whether it was purchased in the UK, abroad or on a foreign website – so you can buy online using your credit card and still be protected.

How do you make a claim?

If you are faced with the non-arrival of goods or cancellation of your flights (for example) you need to contact your credit card issuer. If you have a Visa card issued by, for example, Barclays, contact them. Don’t contact Visa. The same holds true if you have a MasterCard and note that some banks issue American Express cards. Contact the bank not the badged card type.

If the company you bought the product from has gone bust, then the card company will probably try and tell you to reclaim the cash from the company in administration. No, your claim is with the card issuer (bank) and their claim is against the company. Don’t be fobbed off! If the company is still in business but you haven’t received your product you can still call the card company to claim back your money as part of the Consumer Credit Act.

What if you purchase by debit card?

Debit cards are not protected under the Consumer Credit Act. However, if you paid on a Visa debit card, or a Visa credit card under £100, then there’s Visa Chargeback.

If you complain to your bank within 120 days of realising there’s a problem then the bank can put the procedure in motion to claim the money back from the suppliers bank. This is a last resort after you cannot get your cash back from the company and was first used after the Christmas Hamper company, Farepak, went bust in October 2006.

What about airlines?

If you paid by credit card and directly to the airline, then you are in the clear: you are covered by the Consumer Credit Act, as long as the purchase is over £100. However, if you purchased using a debit card, then like other consumer purchases you could lose out. Proceed as above chargeback claim if the cost was under £100

Booking through a Travel Agent

Here you are probably protected no matter how you paid so long as the agent in question is a member of the Air Travel Organisers’ Licensing (ATOL) scheme. If so, you are entitled to a full refund. However, some agents only refund the cost of the flight if it was booked in conjunction with a hotel, so some will shun pleas to refund low cost airline travel. You will have to check with your travel agent.

Things are likely to get worse over the next few months so do take care. Living in the Isle of Man I fly a lot to Europe (via the UK or Ireland) several times month and I used to pay by debit card to save the extra charges. Not any more. Credit cards for me!

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