Protecting Yourself
Using a credit card provides you with extra protection if things go wrong - protection that you don't necessarily have if you pay by debit card, charge card, cheque or cash. In addition to this extra protection there are steps you can take to protect yourself if you find you are unable to make your repayments and to protect yourself from fraud or if you are a victim of fraud.
Click on the link to view information about each of the following topics:
- Section 75 of the consumer credit act
- Payment protection insurance
- Card protection agencies
- Fraud on your card
- Identity fraud
Section 75 of the Consumer Credit Act
On UK-issued credit cards you benefit from Section 75 of the Consumer Credit Act when you make a purchase between £100 and £30,000. Under Section 75 credit card companies are jointly responsible, along with the supplier of the goods or services, for any breach of contract or misrepresentation by the supplier. This is a useful protection if, for example, the supplier goes out of business after you have made your purchase.
Imagine that you buy a computer and when you get home and try to turn it on you discover that it doesn’t work. Normally you would take the computer back to the shop where you bought it. But what if the retailer has gone out of business in the meantime? If you did not pay using credit you would have no way of getting your money back. But, if you bought the computer on your credit card, you would be able to make a claim against your credit card company for compensation or a refund for the broken computer.
In March 2006, the Court of Appeal ruled that Section 75 applies to transactions with overseas companies, on UK-issued credit cards, as well as to those transactions made in the UK, even if the transaction with the overseas company is made over the phone or Internet. This ruling took immediate effect.
You only get this protection if you pay by credit, including credit cards – payments by debit card, charge card, cheque (including credit card cheques), or cash aren’t covered.
Payment Protection Insurance (PPI)
Many credit cards will offer you Payment Protection Insurance, or PPI. When you fill in your application form you will be asked whether you want to take out any PPI cover. You can also ask your credit card company at a later date should you want PPI cover on your account.
PPI is a type of insurance that can provide valuable protection for your repayments in the event that you lose your job, have an accident, become ill, or if you should die. If any of these things were to happen to you then your card company will pay off a percentage (say, 10%) of your outstanding balance each month, usually for a maximum period e.g. twelve months. If you were to die then PPI will usually pay off your outstanding balance in full or at least to a maximum amount.
This insurance is usually charged in terms of pence per £100 on your balance. For example, if in a given month you have a balance of £1,000 and PPI costs 75p per £100 then you will be charged £7.50 (75p x 10). Premiums are normally applied automatically to your account each month.
Read the Terms & Conditions of PPI carefully to make sure:
- that you are covered
- what you are covered for
- how long the cover lasts
- how much it costs
- how much it will pay out.
For example, you may not benefit from PPI if you are self-employed, in temporary work or over a certain age.
Card Protection Agencies
A Card Protection Agency (CPA) is a business that provides cardholders with a card number registration service. In the event that your card or cards are lost or stolen, you can contact the CPA who will, on your behalf, advise your credit card company or companies so that a 'stop' can be placed against any card numbers you have.
Credit card protection agencies allow you to make a single call to have all your cards cancelled and replacements ordered. These services can cover all types of cards, not just credit cards. Additional benefits of the services can include emergency cash advances, emergency hotel bill payment, cover for lost cash, and replacement travel tickets to get home.
The help you get and how much it costs will vary from one CPA to another. For the latest details of what's on offer from card protection agencies or any other relevant information you should contact the various companies.
If you do have a card protection policy you will still need to contact the police yourself to report the loss of your cards, whether you are at home or abroad, as you will need an incident report number to make a claim on any household or travel insurance you may have.Card Protection Agencies accredited by APACS include:
- Cardif Pinnacle plc - 020 8207 9000 - www.cardifpinnacle.com
- Cims Limited - 01753 828 600
- CPP Group Plc - 01904 544500 - www.cpp.co.uk
- St. Andrew's Membership Services - 0870 850 6 850
There may be other companies offering similar services.
Many credit card providers offer these types of additional services using APACS accredited agencies so you may want to check with your credit card company for more details.
Fraud on Your Card
Unlike elsewhere in world, UK cardholders are not financially liable for fraud on their cards. However, card fraud is a very real problem and costs the UK hundreds of millions of pounds a year. Fraud on cards has a high cost to society as it is often used to fund other serious organised crime. Although the personal cost of card fraud for innocent cardholders isn’t financial, there is the inconvenience of reporting an incident and providing any relevant documentation. There is also the inconvenience and frustration of being without your credit cards and waiting for any fraudulent activity on your account to be reversed or offset, as well as the fear and sense of violation that occurs.
If someone else uses your credit card before you tell your bank or building society that it has been lost or stolen, or before you tell them that someone else knows your PIN, the most you will have to pay is £50. However, if you are shown to have acted fraudulently or without reasonable care, for example, by keeping your PIN written down with your card, you risk having to meet all the losses.
Protect yourself from being a victim of card fraud by:
- keeping your PIN safe
- never letting your card out of sight when making a transaction
- only shopping on secure websites and from a computer that has up-to-date virus protection
- carefully discarding any receipt or statements by shredding them or tearing them up
- carefully checking your monthly statement for evidence of fraudulent activity reporting lost/stolen cards or suspicion of fraudulent activity immediately to your credit card company.
If you discover that you are a victim of card fraud:
- Tell your credit card company immediately.
- Your credit card company will cancel your card immediately. If you still have the card in your possession remember not to use it again.
- Your card company should be your first point of contact when reporting card fraud. New procedures recently came into effect in England, Wales and Northern Ireland which mean that banks and financial institutions become the first point of contact for cheque, plastic card and online fraud offences. Consumers should report instances of these types of fraud straight to their bank or building society and not to the police. It will be up to the financial institution involved, and not the account holder, to pass details of the relevant crime on to the police. Where an additional crime has been committed with the fraud, for example, the victim has had their wallet stolen or the card used fraudulently was stolen as a result of a burglary, then this should still be reported to the police.
- If your card is used fraudulently, but you still have the card in your possession, you will not be liable to pay for any part of the losses. You would probably still have your card in your possession if you were a victim of card-not-present fraud or if your card has been skimmed and a fake version produced.
For further information about all types of card fraud, and for further advice on how to prevent and protect you against card fraud, visit Card Watch at www.cardwatch.org.uk
Identity Fraud
Identity fraud is a growing concern in the UK. It occurs when a criminal uses your personal information, without your knowledge or consent, to commit a crime such as fraud, deception or theft.
Identity thieves steal or obtain key pieces of personal information and use them to impersonate you and to commit crimes using your name and identity profile. In addition to your name and address information , criminals look for and use utility bills, credit card and banking details, including statements, to carry out their activities, which often include applying for birth certificates and passports in your name.
Stolen identities can be used to open new bank accounts, apply for loans and credit cards and various social benefits.
Identity theft on cards occurs when a criminal uses fraudulently-obtained personal information to open or access card accounts in your name and without your knowledge. There are two types of identity fraud on cards:
- Application fraud - where a criminal applies for a card or banking product using your details. The application may be supported by stolen or false documents, including utility bills, banks statements, passports or driving licences.
- Account take-over - where a criminal has obtained key personal information and uses this information to takeover the running and operation of your account.
There is a specific website designed to provide you with practical advice on how to protect yourself from being a victim of ID fraud. This site also provides practical advice on the steps you can take if you discover that you are a victim of identity theft. To view this site go to www.identitytheft.org.uk.
For further information and tips to help you protect yourself against identity fraud go to www.cardwatch.org.uk.
