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Page last updated at 15:09 GMT, Friday, 5 September 2008 16:09 UK

Debit card refunds: your rights (updated)

XL airline
You may need to get your refund direct from credit card companies

After the collapse of XL, we thought we'd update our guide on how to claim money back from your credit card.

What protection is available if I use my credit card?

When you spend between 100 and 30,000 on your credit card you are covered under Section 75 of the Consumer Credit Act. That applies if the goods you buy are faulty or if products or services are not delivered: in the XL case if you don't get your holiday.

You can claim the money back from your credit card company. This applies even if you pay just a deposit on your credit card, as long as total price of your purchase is between 100 and 30,000.

So do I get the same protection if I use my debit card?

There are 71.6 million debit cards in the UK: two thirds of them are Visa and a third are Maestro.

Maestro debit card

Under Maestro UK rules, UK cardholders don't have the right to a refund if a company fails to deliver the goods or services they have paid for.

In a statement, Maestro told us:

"The cardholder's bank is not obliged under both the Maestro domestic rules and UK law to refund the cost of those goods/services [which aren't delivered]."

If the company goes bust, it said:

"The situation is the same as for consumers who have made payment by cash or cheque, where they can stand in line as a creditor of that failed business."

However, there is an exception.

If you are a UK cardholder who ordered goods online from an overseas website, Maestro says you have the right to a refund if they don't arrive.

So what is an overseas website?

Maestro says it is any website whose "centre of operations" is outside the UK. Which may be the case even if a website name ends with dot uk, it says.

Update 3 September:

In earlier versions of this online story and during the Working Lunch programme on 2 and 3 September, we said that Maestro would refund purchases made online that then aren't delivered.

We said: "So if you've ordered some books, for example, and they don't arrive you can ask for the money to be credited back to your account."

However, Mastercard, which runs Maestro, has now issued a new statement (above) which changes their earlier position.

Update 4 September:

Maestro have given us further information about the rights of UK cardholders using overseas sites (added above).

Visa debit card

A Visa debit card offers significantly better protection for shoppers. Their scheme is called Visa Debit Chargeback and any bank that issues a Visa debit card has to comply with the scheme.

You can claim money back if the goods you buy are damaged, or the product or services are not delivered.

There is no limit on what you can claim. But you have to claim within 120 days of the date you expected the goods to be delivered or the firm going bust.

So this isn't as good as when I use my credit card?

You get better protection if you use your credit card.

The key difference is that when you claim on a credit card under Section 75 of the Consumer Credit Act, the credit card company is legally liable.

But the Visa Debit chargeback scheme is not legally binding, so you don't have any legal redress if you are unhappy.

I have a Visa debit card, but my bank says it hasn't heard of the Chargeback scheme. What should I do?

Unfortunately, a number of Working Lunch viewers have found this.

But a spokesperson for Visa Europe stressed that all legitimate claims that abide by the terms and conditions should be dealt with.

He told us that all banks who are members of the scheme should comply with the rules. The members include Nationwide, Barclays, Halifax, and Lloyds TSB.

So you will just have to insist, or ask to speak to someone more senior.

What if I bought goods outside of the UK, am I still protected?

Yes, in general for Visa debit. There are some small differences in the way the way the rules are applied in some countries, but in general, you should be protected.

I am paying for a guitar in instalments. I have already paid some in cash and some on my Visa debit card, but the retailer has now gone into administration. Can I claim all the instalments back?

Quite simply, yes you can, as the company has gone bust. Remember you have to get your claim in within 120 days of their collapse and back it up with proof of all your transactions.

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