Credit card companies 'wrong about payments insurance '

Credit card companies are wrong to reject insurance payments and there has been a marked rise in consumers complaining about this practice, it has been revealed.

According to the Financial Ombudsman (FOS), 50 per cent more consumers are complaining about credit card companies regarding payment insurance, the terms of which they feel have been breached.

Under section 75 of the Consumer Credit Act it is a legal requirement for credit card companies to cover the purchase of goods between £100 and £30,000.

With a growing number of companies going into liquidation COMMA credit card companies are being asked to honour this responsibility more often, as the option of approaching vendors is removed.

Martyn Saville, senior researcher at Which?, said that credit card companies are "absolutely wrong" to be fobbing off such claims in an attempt to shirk responsibility.

"It's a legal right - you've got a choice between going to a retailer and going to a credit card company," he explained.

"Section 75 is really clear; it's black and white, you've got the choice. If you choose to go to the credit card company they shouldn't be rejecting it, they should be honouring [the consumer's] legal right."

However, he said that because in law there is the choice to between going to the retailer or the credit card companies, a lot of credit card companies "seem to be pushing people towards the retailer route or industry schemes rather than paying out themselves".

According to the FOS, the advantage of using a credit card is that customers who have a claim against a supplier for breach of contract or misrepresentation will generally have an equal claim against the card issuer.

Claims are often made against the card issuer when the supplier has gone out of business or disappeared, although firms will sometimes tell customers that they must first get a court judgment against the supplier.

The FOS says that is wrong as the customer can choose whether to claim against the supplier, the card issuer, or both.

To be covered under Section 75 consumers must have made the purchase on a credit card rather than a debit or charge card.

Mr Saville concluded that consumers will win if they show the credit card companies that they know their rights are not willing to allow any "wiggle room".

"Tell them it's section 75, tell them you'll go to the FOS, tell them that they have equal liability with the retailer," he said.