Skip to main contentSkip to navigationSkip to navigation
Spain, Mallorca, view to beach of Sant Elm.
Promise of a sun-drenched villa in Mallorca … only the booking website turned out to be a scam. Photograph: Westend61/Getty Images/Westend61
Promise of a sun-drenched villa in Mallorca … only the booking website turned out to be a scam. Photograph: Westend61/Getty Images/Westend61

Scammed and the bank won’t pay up? Beware the Section 75 get-out clause

This article is more than 6 years old
We fell for a scam website but Santander wouldn’t refund our money under the Consumer Credit Act

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.

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. Submission and publication are subject to our terms and conditions

Comments (…)

Sign in or create your Guardian account to join the discussion

Most viewed

Most viewed