Prepaid Purchases – Are You Protected?
Prepaid Purchase Protection – Your Consumer Rights
If I have a problem with goods that I purchase, or the merchant goes bankrupt, am I protected under the Credit Consumer Act, if I used my prepaid card to pay for the transaction or service?
One of the most important parts of the Consumer Credit Act (CCA) is one that few people are fully aware. Section 75 of the Act means that when you buy something using your credit card, your contract is with both the merchant (retailer) and the company that issues your card. They both have an equal liability if anything goes wrong so you can take action against either of them to get compensation. This is restricted to goods or services purchased for more than £100, but is extremely beneficial if something should go wrong with your transaction e.g. the retailer goes bankrupt!
The CCA covers everyone with a credit card, but given that prepaid cards do not fall under the CCA, as the bank is not lending money, you are not covered.
Only one prepaid card issuer in the UK voluntarily offers consumers this valuable protection, so make sure you consider this when selecting a prepaid card appropriate for your needs. If you only intend getting a pre-paid credit card for cheap international money transfer then this may not be important to you. However, if you intend using the card to purchase goods or services on the high street and internet, this could be valuable prepaid protection!