Can your customers rely on consumer protection?

Considering the sheer number of electronic transactions being made every minute of the day, there’s a surprising amount of ignorance regarding the extent to which consumers are protected in their dealings with companies great and small.

E-commerce and M-commerce has changed many rules consumers take for granted on the high street. Knowing what’s changed is a business essential.

Playing their cards right

Most customers will have vague notions of section 75 of the Consumer Credit Act 1974 being somehow benevolent. While it’s true that the introduction of section 75 has provided credit card-wielding consumers with something akin to a personal force-field, those who continue to make smaller purchases using a debit card aren’t covered.

In these cases, an often little-known process known as chargeback may be possible. Chargeback allows consumers to reverse transactions if they are unhappy with the item they bought or if their card has been used fraudulently.

Visa chargeback is the most commonly known scheme but other networks such as American Express have similar arrangements. Chargeback can also protect credit card users where section 75 is not applicable, such as for purchases under £100.

Chargeback claims can be made where there is evidence of a breach of contract; such as when goods have not arrived, have arrived damaged, are not as described or the merchant has gone AWOL. Claims are made to the card issuing bank, which then puts in a request to the merchant’s bank.

Chargeback is especially useful in cases where payments are made through online payment systems such as PayPal, which are not covered by section 75.


The knowledge of exactly how and what protection is afforded is all the more important as innovative new ways of electronically paying for goods are introduced. M-commerce is the latest, and refers to the buying of services and goods via a mobile device.

The surging popularity of smartphones, and their owners’ subsequent insistence on using them for every conceivable activity, suggests this type of payment method is here to stay.

While e-commerce entered the world in a murky fug of legal uncertainties and general confusion, m-commerce has benefitted from their successful resolution. A key difference between the two is that when a consumer pays for something via text or a premium-rate call, they are protected by an extra layer or regulation.

PhonepayPlus regulates suppliers of phone-paid services in the UK and all must bow before its code of practice. The code ensures providers offer clear and accurate pricing information and advertising. PhonepayPlus can fine organisations that fail to toe the line.

The main legal issue in m-commerce surrounds the use of consumer’s location data for targeted marketing. For instance, part of the Apple iPhone’s terms and conditions state: “Apple and our partners may collect, use and share precise location data, including real-time geographic location of your Apple computer or device.”

Location data, particularly when held in conjunction with other information pertaining to an individual, may fall under the auspices of the Data Protection Act 1998, which is designed to regulate the use of personal data.

Furthermore, those organisations that wish to use location data to target specific customers should be wary of falling foul of the Privacy and Electronic Communications Regulations 2003, which state that consumers cannot be sent unsolicited marketing email or text without their express consent.

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Justin Schamotta is a senior staff writer for consumer site Choose (follow @choosenet). He specialises in covering credit card terms and right issues, as well as commentary on product and industry updates. The money section also covers personal loans, current accounts and savings - find more on