My friend paid £3,750 for a car through a local dealer. Another £3,750 was to be paid on delivery. A week before the delivery date the dealership went into administration and he’s been told that as the company is heavily indebted he stands little chance of getting his money back. He paid with a Visa debit card, so his payment is not protected by Section 75 of the Consumer Credit Act, but I’ve since discovered chargeback and wonder if he’d be covered by that. If so, how and where does he make a claim? ST, Nottingham
Yes, it sounds as though he is eligible to make a claim. The chargeback scheme is a little-known protection for Visa, MasterCard and Amex debit card transactions which participating card issuers voluntarily subscribe to and it allows you to claim a refund if goods arrive faulty or not at all, or if a merchant ceases trading.
Unlike credit card protection under Section 75, which only covers purchases over £100, there is no minimum spend to qualify. But crucially the scheme is not enshrined in law and the card company is not jointly liable for the transaction. This means there are no guarantees that your money can be recovered and you can’t take the bank to court if you fail, but it’s probably your only hope.
Your friend needs to write to his bank within 120 days – the Which? website publishes a template letter and it will put in a request to the dealer’s bank to return your payment.
If you are unsuccessful you can go to the Financial Ombudsman Service within six months of your final correspondence from the bank.
If you need help email Anna Tims at your.problems@observer.co.uk or write to Your Problems, The Observer, Kings Place, 90 York Way, London N1 9GU. Include an address and phone number.
