Why Plastic Really Is Fantastic!

How your Visa debit card can protect you when things go wrong.

A couple of months back my boyfriend ordered some items from a company called Sports Centre Direct. Unfortunately, unbeknown to him, this company had a habit of `forgetting' to make deliveries.

A few weeks went by and the items still hadn't arrived. Several phone calls and empty promises were made, but there was still no sign of the goods.

Then one sunny morning, a letter landed on the doormat to say the company had gone into administration, and the items wouldn't be delivered.

The trouble was my boyfriend had used his Visa debit card to make the payment instead of his credit card. So I assumed that, as he wouldn't be covered by Section 75, he would have to kiss his money goodbye. But then I found out about the Visa debit chargeback scheme.

What is it?

You may be aware that, under Section 75 of the Consumer Credit Act, if you use your credit card to make a purchase and something goes wrong, you'll be able to make a claim against your card issuer (providing the price of the item was between £100 and £30,000).

But what you may not know is there is also a form of consumer protection for your Visa debit card -- commonly known as the Visa debit chargeback scheme.

The name `chargeback' refers to the process that returns the funds to your card issuer when you have successfully disputed a payment.

Like Section 75, the scheme allows you to claim your money back if your goods don't arrive or the company goes bust. But sadly, the rules of the scheme are not as clear cut as Section 75, as each case is assessed on its individual merits.

How does it work?

If you've ordered goods which don't show up, your first port of call should always be the retailer itself. Providing the company hasn't gone bust, you should be able to resolve the situation with the retailer without getting anyone else involved.

However, if the retailer refuses to give your money back/send you a new item, or if the company has ceased trading, the next step is to make a claim through the Visa chargeback scheme.

To do this, you need to contact your card issuer. Your issuer is likely to ask you to fill in a form detailing what happened, or put your complaint in writing.

You may also need to show proof of purchase and/or communication between yourself and the retailer.

Your card issuer will then contact the retailer's bank to reclaim the money.

Unlike with credit cards, there is no maximum or minimum limit on chargeback claims.

How long do I have to put in a claim?

This will vary from person to person.

If you have been made aware that the company has ceased trading, you have 120 days after the date you found out to make a claim. So in my boyfriend's case, it would be 120 days from that sunny morning he got the letter informing him the retailer had gone bust.

If, however, the company is still trading and you simply haven't received your goods, you will need to work out which of these dates came last in your case:

the date your debit card issuer processed your payment
the date the service you paid for was expected to be received
the date you were expecting to travel

Whichever date came last is, for chargeback purposes, the date your order should have been fulfilled. You then have 120 days after this date to make a claim.

If you're confused, overall, I'd simply say: the sooner you put in a claim the better.

When will I get my money back?

Unfortunately, it's not terribly clear how long it will take before you receive your refund. This is because it can vary depending on your debit card issuer and on individual circumstances.

In some cases, if your bank fully understands your situation, it may refund you right away -- even before it receives the money from the retailer's bank. But in other cases, it will take longer.

Although I'd like to say my boyfriend has been fully refunded, as yet he hasn't. But then he did only make the claim about a week ago.

Other things to note

The Visa debit scheme isn't actually a legal requirement -- it's just part of Visa's internal rules. As a result, it is more limited than Section 75.

That said, if you do think you have a case, there is no harm contacting your card issuer to see if you can make a claim.

You should also be aware that some bank staff will claim they have not heard of this procedure and will try to reject your case. But this is purely because many staff genuinely have not yet been made aware of the scheme.

If you do find the person you talk to about the scheme has never heard of it, you should ask to speak to a supervisor or explain what the process is. Be warned that this scheme only covers Visa debit cards, so if you are with Maestro for example, you won't qualify.

Overall, I still believe that you are better off using your credit card -- particularly for larger purchases -- as you have more legal footing. Providing you pay your card off in full each month, you won't be paying anything more to have that extra peace of mind.

That said, it's reassuring to know that Visa debit card users do have some protection. And hopefully next time your goods don't turn up, you'll know exactly what to do to get your money back!

More: Why Credit Card Spending Is Foolish! | Credit Cards Versus Debit Cards