I booked a villa holiday in Mallorca for £1,624.76 with an online company called Balearic-Travel.com. The firm then stopped all contact. The night before our departure, I researched the company online and discovered it was a fraudulent website which had scammed others.
I immediately contacted my bank, Santander, and made a claim for a refund under Section 75 of the Consumer Credit Act. But it says that, because I paid via TransferWise, I was not protected.
MG, London
You’ve fallen foul of a little-known, even less understood, loophole in the Consumer Credit Act which holds card issuers jointly liable if a trader breaches a contract.
For Section 75 to apply, there must be a direct relationship between the customer, the card issuer and the offending merchant. If that relationship is broken by a third-party payment handler, the protection is lost.
The trouble is, many online companies use specialist payment processing companies – PayPal is the best known – and customers aren’t necessarily aware of the fact, let alone its implications. It doesn’t help that even experts are confused.
The Financial Ombudsman Service recommends affected customers get in touch because not all third-party payment mechanisms invalidate Section 75 and deciding which do, and don’t, is complex.
Try your luck with its arbitration service since Santander confirms Section 75 does not apply as you paid TransferWise and it fulfilled its part in the deal by transferring the money to Balearic-Travel.com whose website has disappeared.
Last year Action Fraud disclosed that nearly 100 people a week are scammed by companies which clone legitimate holiday websites. A pay-per-click-deal with Google means they appear at the top of a search for key words such as Balearic villas, but too-cheap-to-be true properties either don’t exist or have been let out already by reputable firms.
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