Credit card companies 'should pay up'

Credit card customers often misunderstand the protection their provider is obliged by law to give them where there is a breach of contract or misrepresentation, according to the Financial Services Ombudsman (FSO).

Britons tend either to accept their creditor assertion that they have to track down and sue the provider of goods and services first, whereas that is not true.

According to Section 75 of the Consumer Credit Act 1974 credit customers are entitled to a refund from their credit provider in where there is a breach of contract or misrepresentation provided the cost of the goods or services is between £100 and £30,000 and no more than £25,000 of the price can be paid with credit.

The report also says that the FSO will side with people who are led to spend time and effort chasing the trader, when the provider should have refunded the lost money. In some cases, the expense incurred by the customer will be taken into account when the award in their favour is made.

While this comes as a pleasant surprise to many, though the FSO does not know how many could benefit from this knowledge, some customers also think they are entitled to more protection than what section 75 provides for.

It warns that, contrary to some peoples expectations, credit card users are not entitled to a refund on all purchases.

According to the FSO, some people confuse section 75 protection with insurance coverage some providers issue on purchases.