How often do you make a payment for a product and then think about it later and wonder if there is a problem with the product or service, how likely are you to get your money back?
Well fear not. Here’s a quick guide to protecting your cash when paying for any product.
First up, when you buy any product or service you make sure it comes with a money back promise right?
Well I certainly hope so. Rule 1 is always – no trial,no payment.
If you are not then you are taking large risks because if something doesn’t pan out as it should then you’ve lost your hard earned cash with no recourse.
So you have the money back guarantee sorted – ideally for at least 30 days.
Then the next best protection is when you have paid by credit card and the amount is over £100. Here you probably then have the best protection. You see, credit cards automatically protect you for those larger sums and you can if necessary claim a charge back if something isn’t quite right.
No hassle, it just takes a quick call to explain the issues. It takes a few days but credit card companies are excellent in this regard.
Next up – Clickbank is probably next best as they will only allow products to be sold through them if there is a 60 day refund policy which they guarantee.
So if you buy via clickbank you will get your money back inside the 60 days. Outside of that and you have no chance at all.
Debit cards seem to be a bit of a law unto themselves and you don’t get the automatic protection that you get with credit cards. I’m trying to find out the exact regulations on this – so any help appreciated.
Direct debits should be safe as houses because you get a guarantee from the bank concerned whenever you sign one. So in the event that anything goes wrong your bank MUST immediately refund you at your request. They then claim that money back from the company involved.
Also companies that offer Direct Debit must prove to the banks they have been financially stable over a number of years. So very little chance of never seeing your money again with Direct Debit and even if something did happen to the company, your agreement includes the bank so you are covered.
It’s like a double protection when you use Direct Debit.
So Direct Debit is the best option for payments which are ongoing and you want added protection.
Claiming – means you have to put in a call or two but you will get your money back quickly in most instances.
Another way of paying is by Standing Order and if a company offers this method you may think it gives you even more control because it’s an agreement with the company.
But there are a few issues with Standing Orders.
You see, Standing Order is an agreement between you and the company you are paying. No bank or anyone else involved. You sign the agreement, the company submits it and it’s binding until YOU cancel it.
If you fail to cancel it then it’ll run forever, the company who you are paying cannot cancel a Standing Order on your behalf. Nor can they change the amount you pay them.
Also you should be aware that the fact almost any company can get set up Standing Order facility, there is little protection from banks.
Unlike a Direct Debits a bank will have undertaken a credit assessment process and considered the issuer is honest and trustworthy and will not abuse the system. It’s very difficult for most firms to get Direct Debit facilities so those that do you can rest assured are financially secure.
This is not needed for Standing Orders as the bank making the payment is yours on your instructions, so the banks don’t do any due diligence on your behalf. They just pay the amount until you say stop.
But you can always cancel the Standing Order can’t you? Well yes but you have to be more and more careful nowadays.
I’ve heard stories of people passing away and money still being claimed from their joint bank accounts years down the line. Remember only the original signee of the Standing Order can cancel it, the company involved cannot over rule your signature.
With Standing Order the money leaves your account on the specified date of the order and used to take 3 days to reach its destination.
Often banks will now set up a standing order as a Faster Payment which is all but instant and so if they make a mistake or you want to cancel on the day it can be too late.
Some banks will insist you cancel the day before or else leave you to try and recover the money direct from the company.
I had the situation recently where I had provided a standing order to allow me to undertake a free trial review of a service but the intention was to cancel before the payment was due.
I contacted my bank 2 weeks before the payment was due and was told that they had not received the instruction yet but not to worry as it took 3 days for them to set up the first payment so I would see it appear on my account at least 1 day before payment was due and be able to cancel on-line.
I did as I was told and checked every day – taking screen-shots of my standing orders each day just in case- and lo and behold the payment was made on the due date without it ever having appeared as being set up.
My letter to the company cancelling the payment has been ignored and I am therefore potentially out of pocket despite doing everything the bank told me I should.
The good news is that the bank agreed to refund my payment but only because I had taken every precaution to be able to prove to them that they should not have made it in the first place.
Without that proof I suspect I would have lost my money through no fault of my own.
So the moral of the story is think before you pay.
If you are making a one-off purchase and it’s over £100 always use a credit card.
If you are paying for a subscription or membership then Direct Debit is certainly the most secure and gives YOU the most protection.
Category: General Advice