Which is the best way to pay for something?

(1/10/14) There are plenty of ways to pay for goods and services, but which payment methods offer you the best protection? We reveal your rights.

Shopbrands Resized

This week, we have been contacted via Facebook by a couple of people who have had problems with a company called You Beauty Discovery. This firm provides beauty products in the post on a monthly basis. Both ladies have been trying to cancel their payments, but with no luck, so are still receiving beauty products that they no longer want. We’ve been advising them on how to resolve this, plus we’ve added the company to Resolver, so if anyone else has the same problems they can solve them via www.resolver.co.uk .

Cash

Cash is the tried-and-tested method for payment. While paying this way is quick and simple, your rights are limited. Your consumer rights are generally the same, so you can, for example, dispute a payment under the Sale of Goods Act. But Remember to keep a receipt, as this is the only form of proof you will have of payment.

Paypal

A lot of websites (not just eBay) allow you to pay using Paypal. It is a quick, simple and easy way to make payments, but it’s important to know your rights if something goes wrong with the purchase.

Paypal expects you initially to raise any issues with the seller. You must do this within 180 days of the purchase.

You can raise issues just as you would with any other goods. Remember - if you are buying from an individual, you are effectively buying as seen, rather than the laws that cover a purchase from a shop or business.

When you purchase a product from businesses, it must meet certain standards. The main element is the Sale of Goods Act, which means the product must be as described, fit for purpose and of reasonable quality.

Paypal will not cover certain products under its protection scheme, including vehicles, flights and custom-made items. These are also excluded from the European Consumer Act for products that you have bought online or via a catalogue.

Paypal will refund for 

• Claims made for physical goods that can be posted and are not prohibited
• Disputes raised within 45 days of a single Paypal payment for the full price of the item. If no satisfactory response is received from the seller, a claim must be filed within 20 days of raising the dispute
• Buyers cannot make multiple claims on the same payment
• Please note that if the seller has accurately described an item, but you’re just not happy with it, that doesn’t qualify for Purchase Protection, unless covered by Consumer Laws for purchasing online.

Credit card

If you have made a purchase by credit card, then you are covered under Section 75 of the Consumer Credit Act. This is a great piece of legislation but only works if you have bought something by credit card. The purchase must be more than £100 and less than £30,000 to be covered.

If the seller (again a business) has misrepresented the goods or there is a breach of the contract, then the Credit Card company is also liable. In plain English, if you paid by credit card and have a problem, you can claim against the credit card company if you cannot resolve the issue with the company or shop.

You can also make a claim against the credit card company at the same time as the retailer and see which one you can resolve your issue with first.

The legislation covers anything bought in a shop, online or even abroad. You do need to ensure you have paid the full-amount on your credit card.

Debit card

If you have bought something on a debit card, you also have rights to claim back. The rights are not covered by law and so you need to ensure your bank is part of the scheme.

You can use this if the goods are not as described, did not arrive, or the business has ceased trading. In these situations, you can ask the bank to claw back the transaction.

This will be at their discretion – it is not like Section 75 of the Consumer Credit Act and there is no joint liability. Your bank will determine if they think the claim is valid. If so, they will send a request the seller’s bank and if there is money in the account, then you will recover the payment.

Remember - if there is not a valid reason for recovery, the seller can claim you are in breach of contract.

Direct Debit

A Direct Debit is an instruction from you to your bank or building society. It authorises the organisation you want to pay to collect varying amounts from your account – but only if you’ve been given advanced notice of the amounts and dates of collection.

Once you have agreed those, the money is deducted automatically. If the organisation you are paying wants to change an amount or date of collection, they have to tell you about it first.

If the amount of the payment is going to change, then you must be given 10 days notice before any change in the payment occurs. If there is an error with any payment, you are entitled to an immediate and full refund and you can cancel your direct debit at anytime by simply contacting your bank.

Continuous Payment Authorities

This is like a Direct Debit payment, but without the same guarantees. They are used by payday loan lenders, online DVD rentals, gym membership, porn websites and other subscription websites.

They are used where the amount or date when money is taken from your account is variable. You can tell the difference between a direct debit and a continuous payment authority, as a continuous payment will only take the long number of your credit or debit card.

Since 2009, you have the legal right to cancel continuous payments, so even if the company does not want to have it cancelled it does not matter.

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