Protected when you pay by card

Visa Europe

October 07,2019 16:26 PM GMT


One advantage of paying with your debit or credit card is that it can protect you when something goes wrong.

As part of Visa’s commitment to consumer protection, we have an established process for card issuers which covers scenarios such as Visa debit and credit cardholders failing to receive goods or services that they have paid for on their cards.

This consumer protection has become particularly relevant since the cessation of trading of Thomas Cook Group plc on 23 September 2019. This is an important time for Thomas Cook’s consumers abroad or with future bookings, so it is worth outlining the options and protection available to customers who paid for their travel with a Visa debit or credit card.

Visa cardholders who are currently travelling with or scheduled to travel with Thomas Cook and paid with their Visa credit and debit card are advised to first contact their tour operator to understand whether their circumstances are covered by a bonding authority or insurance scheme. In the event that they are not fully covered, and only partial or no compensation at all will be paid through this route, they should then speak with their card-issuing bank to discuss their options.

UK Finance, the industry body for the UK’s financial services industry, has developed guidance around protections available to consumers who have purchased travel or a holiday package using a UK-issued debit or credit card. These include both chargebacks and Section 75 credit card protection.

What is a chargeback?

A chargeback (otherwise known as a dispute) is a means for your card-issuing bank to reclaim funds from the retailer’s bank when you do not get the goods or services you paid for, including if the retailer has gone out of business.

Chargebacks are not a legal right. Cardholders who paid on a Visa debit or credit card should address a chargeback claim to their card-issuing bank, which will put in a request to the retailer’s bank. The process for managing these claims is determined by the Visa rules. While there is no guarantee that your card-issuing bank will be able to recover the money through chargeback, they will assess your claim fairly.

With a chargeback, the value claimed cannot exceed the value of the original transaction. Where a partial refund has already been made, any chargeback will only cover the remaining amount of the original transaction.

What is Section 75?

When using a credit card, you may also have Section 75 protection. This provision (part of the Consumer Credit Act 1974) protects you if you use your credit card to buy something costing more than £100 and up to £30,000.

This protection covers the whole cost of an item or service even if you have only paid the deposit on your credit card. It may also cover additional reasonable expenses.

There are certain requirements that need to be fulfilled for a Section 75 claim to be available. The company from whom you bought the goods or services must be the supplier of those goods and services.

You are legally entitled to get your money back if the retailer you purchased the product or service from:

  • breaks their contract with you, including if they go out of business;
  • does not deliver what they have promised.

There are some instances where Section 75 does not apply, such as when goods or services are paid for by a secondary cardholder or are bought through an intermediary. This includes aggregators which sell on flight and hotel bookings. However, such agencies often have their own payment protection systems in place.

More information about chargebacks and Section 75, as well as specific guidance for anybody affected by the collapse of Thomas Cook, is available on the UK Finance website.

In the meantime, at Visa we are continuing to work closely with our financial institution clients to support them in managing claims from affected cardholders.