Farepack reimbursements "not clear cut"
Published On 8 December 2006
UK payments association APACS has highlighted today that while some Farepak customers who paid money into the scheme using a credit card will be protected from losing their money when the company collapsed, others will not. A spokesperson for APACS has said that whether or not customers will be able to claim their money back from their credit card company will largely depend on whether they own a VISA card or a MasterCard.
Farepak was a Christmas savings scheme, which encouraged customers to pay money into an account that would then enable them to buy mail order goods in time for Christmas, thus enabling them to save up in advance and avoid getting into debt.
However, the company went into liquidation in October, leaving thousands of savers without the funds they had saved in order to buy Christmas presents and festive food.
Many customers have lost their savings outright, but for those who paid with a credit card there may be hope for a reimbursement claim.
According to Jemma Smith, the spokesperson for APACS, the issue of whether customers will be exempt from such cover remains clouded.
Although Section 75 of the Consumer Credit Act gives consumers additional protection for goods purchased on a credit card for a value of between £100 and £30,000, the Farepak case may not come under this definition.
"It was not clear cut that anyone who saved with Farepak would get compensation under Section 75 of the Consumer Credit Act," said Ms Smith.
"However, there has also been some talk about VISA allowing debit card holders money back. This is because VISA and MasterCard set rules which the card issuers have to abide by. Under these rules a Section 75 type claim may be made on a debit card."
"Even though the VISA scheme allows for this there is no particular legislation that says they have to.
"MasterCard don't follow through on Section 75 type claims on debit cards and that is where the confusion lies."
In addition, said Ms Smith, as Farepak was a savings club it is likely in any case that the majority of people would have paid with cash.
She added that the various global card schemes: VISA, MasterCard and American Express, were simply the infrastructure behind the provider and that customers do not generally take the 'badge' into consideration when applying for a credit card.
