Questions of Cash: Beware loss of rights with credit card cheques: The Independent


Q. My husband and I have an Abbey Mastercard. We received some 0 per cent credit card cheques last Christmas, but had not requested them. We ordered a kitchen from MFI, paying the deposit on the credit card and the remainder using one of the cheques.


After MFI went bust, Abbey said that it would refund the deposit, but not the payment that was covered by the cheque as this is treated as cash and we must retrieve this from the vendor. MFI has made it clear that it cannot reimburse us for the £2,000 kitchen that we never received. RG, by email.

A. A benefit of paying by credit card is that, under Section 75 of the Consumer Credit Act 1974, transactions are normally guaranteed by the credit supplier. If a trader goes broke without supplying goods paid for with a credit card, you can obtain a refund from your card issuer. Consumers do not have the same protection if they pay using credit card cheques. A spokesman for Citizens Advice says: “This is an issue which Citizens Advice highlighted in its submission to the Banking Code review at the end of 2007.”

CA’s opinion is that “joint and several liability does not necessarily” apply to credit card cheques. The Financial Ombudsman takes a clearer view, having concluded that as the cheques can be made payable to anyone, there is no shared liability for their use.

We spoke to Abbey about your situation. They said that although your card is branded “Abbey”, it was actually issued by MBNA. We then approached MBNA, which says that it cannot reclaim the cheque payment from the administrators of MFI, as Mastercard chargeback regulations do not cover credit card cheques.

MBNA’s spokesman adds: “Credit card cheques are not covered under Section 75 of the Consumer Credit Act.”

In spite of this, MBNA has agreed to repay you the £1,397.83 you paid using the cheque – because you paid the deposit using a credit card. Other consumers may not be so lucky. We suggest that next time you receive credit card cheques you cut them up into very small pieces and carefully throw them away.

Q. I had a problem with a credit card transaction overseas and received no help from my credit card company, Lloyds.

In February, I bought a Nikon camera and lens in Penang, paying £1,373.22 by Mastercard. I was interested in an alternative lens and the retailer said if I came back the next day I could see this, leaving my purchase in the shop.

The next day the retailer said it did not have this alternative lens, but did have a better camera I could opt for, which I agreed to. When I went to an internet café I found that this claim was untrue and the model I had accepted was inferior, two years old and much cheaper than the one I had paid for.

The retailer told me he was unable to give me a refund. I spoke to Mastercard, with whom I agreed I could return the camera to the shop and would then get a refund through Mastercard. But since then, Lloyds has refused to process a refund. TB, by email.

A. It has taken several weeks to resolve this, mostly because Lloyds needed to access, and listen to, the tape of your call to its advisor. Having done this, Lloyds accepts you were given misleading advice, which you followed.

On this basis, it was prepared to fully reimburse you for the cost of the purchase. However, Lloyds said that it was unable to do so at that time, as you had chosen to take local legal advice, with a view to taking legal action to recover your loss from the retailer.

We then contacted you again, but you insisted that you were only taking legal advice because Lloyds told you to do so. Given the problems and cost associated with taking legal action in another country, we suggested you did not pursue a legal remedy and instead accept Lloyds’ offer to reimburse you with the £1373.22 – which you readily agreed to do. Lloyds will now process the repayment.

Q. I have a service contract with British Gas. A friend of mine, a plumber, told me I had a leak in a hot-water tank. But when I called BG out under the service contract, its engineer said there was no problem and that we should only call him if a worse leak occurred.

I was worried that by then it would flood my floor and so I called out an engineer myself and paid £450 for the repair. I asked BG to pay for this, but it will only pay me £150 as a “goodwill gesture”. PG, Rayleigh.

A. BG has now agreed to repay the rest of the cost of the repair to your tank.

Q. I booked a Ski France holiday for myself and my son, including connecting return flights with EasyJet between Edinburgh and Gatwick.

However, the Monarch flight from Grenoble to Gatwick was delayed, we missed the connection to Edinburgh and I had to pay an extra £473 for new flights and an overnight hotel. I had travel insurance with Fogg Insurance Services, which refused to meet my claim. AP, Edinburgh.

A. Fogg Insurance Services confirms that you are not covered under your travel insurance policy, because the problems were caused by a flight delay of less than 12 hours. Your policy also covers missed connections, but only on outward journeys.

As this column has observed before, it is extremely important with travel insurance policies to read the small print and to be aware of exactly what cover you are buying. Often this is less than consumers assume.

Questions of Cash cannot give individual advice. But if you have a financial dilemma, we’ll do our best to help. Please email us at:

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