Different ways to pay for things and your rights - Martyn James

A lot can go wrong when we pay for goods or services. Businesses going bust, sneaky scammers, underwhelming retailers and missing deliveries are just a few of the problems that we have to navigate when shopping online.

A credit card is the safest way to pay when shopping online (Picture: Adobe)

Avoiding these situations is something of a challenge. But the way we pay for goods can provide an extra layer of security should something go wrong.

Here’s my guide on the different ways to pay – and your rights if things go wrong.

Credit cards

Without a doubt, the best way to pay for anything online is by using a credit card. That’s because the Consumer Credit Act gives you extra protection if you spend over £100 and under £30,000.

If something goes wrong with a purchase, even if the business goes into liquidation, you could claim your money back from your card provider. This is known rather clunkily as a “section 75” claim. You can make a claim if the goods are misrepresented, don’t work or don’t turn up. This also works if you pay a deposit on a credit card, too. In fact, you can claim the full purchase price back under these circumstances, even if you paid the rest of the bill a different way.

There are loads of catches and caveats, though. The main one is you must buy directly, not through a third party. Oh, and make sure you pay off the debt before interest is applied, too.

Debit cards

Next up: debit card payments. With debit card (and credit card) transactions, there’s a wonderful industry scheme called “chargeback”.

If things you’ve bought haven’t turned up, a firm looks like it’s about to go under, the goods have been misrepresented, or a refund doesn’t materialise, you can ask your card provider to charge back the money to your account. This can be done urgently if speed is of the essence but in most instances, you’ll need to fill out a form explaining what’s gone wrong.

There are time limits for making a claim, usually 120 days from the date of the purchase. Complaints over the quality of goods are usually between you and the retailer. But if they’re blatantly breaching their contract with you, cashback is your best option for a refund.

E-payment services

E-payments are online-only ways to make payments between you and a retailer, with PayPal being the most widely used brand. Such payments have dispute resolution services between buyers and sellers, so you can seek help if there’s an argument over a purchase. They’re also regulated so you can go to the Financial Ombudsman Service (FOS) for free if they don’t sort things out.

Fraudsters may try to get you to use PayPal’s “friends and family” option. This is a way for you to transfer money to those close to you without the processing fees. However, this type of payment works in the same way as a bank transfer and the money cannot be recalled if you use it.

Payment methods to watch out for

Never pay for goods or services by transferring money from your account. That’s because when you transfer money, it’s difficult to prove that this isn’t a genuine transaction that you’ve changed your mind about. If you are tricked into sending money by bank transfer, speed is of the essence. Contact your bank urgently and ask if they can recall the money. Fraudsters work fast, though, so you may find that the money has already vanished. Again, you could still complain to the FOS if the bank should have known the transaction was suspicious.

If you use an international transfer service like Western Union, your money can’t be recalled either, which makes it another favourite for fraudsters.

Cash may be making a comeback, but remember that you’ll need a receipt to prove you made a purchase. Cheque fraud can occur whether you are a buyer or seller, so make sure you fully understand the six-day clearing cycle if you take or issue a cheque.

Martyn James is a leading consumer rights campaigner, TV and radio broadcaster and columnist