Consumers who book a hotel for their summer holiday or buy an item from an online retailer could be forfeiting legal rights without their knowledge.
Users of major travel booking websites such as Booking.com and Hotels.com, as well as third-party payment websites such as PayPal, could be left without a key element of consumer protection in the event of problems with the purchase.
Section 75 of the Consumer Credit Act offers legal protection against poor-quality goods, mis-sold services and other failures.
If something goes wrong with a purchase worth £100 or more, the credit card company is jointly liable alongside the firm that provided the goods, meaning consumers can claim a full refund from their card provider for the seller’s failings.
However, consumers could be unwittingly sacrificing this right by choosing the convenience offered by booking websites. This is because Section 75 applies only when goods or services are bought directly from the provider, not through third parties.
Martin and Jilli Bates, of Claverdon in Warwickshire, ended up out of pocket when they booked a hotel in northern Italy via Hotels.com.
On arrival Mr Bates was unhappy with the cleanliness of the accommodation, which had visible mould and damp in the bedroom.
The couple had also been promised a view of Lake Iseo from their room, but it was obscured by other buildings. “The accommodation we booked through Hotels.com was listed as four stars but was a very poor-quality hotel,” Mr Bates said.
“We wanted a lake view but there was a derelict warehouse outside our window. We stayed one evening and then booked something elsewhere. It was the misdescription of the hotel that was our problem. We complained to Hotels.com, which said it was not responsible. The hotel itself wasn’t interested in talking to me.”
When Mr Bates checked into the replacement hotel he believed that he could reclaim the cost of the original booking from his credit card provider, American Express.
On his return to England he contacted the card company but his attempt to use Section 75 was rejected outright. Amex told Mr Bates it was not able to consider his claim because he had used a third-party website.
“I wrote to American Express but it said Section 75 didn’t apply because it had no relationship with the merchant – the hotel,” he said.
“I was disappointed because you use your credit card in these situations to protect yourself. Last year, when Monarch Airlines went bust, I had six flights booked with the airline and Amex was brilliant and paid the money back the following day.
“But people can’t rely on Section 75 unless they book with the hotel directly. Section 75 isn’t all it’s cracked up to be.”
Mr Bates said he was disappointed that the Hotels.com website did not make it clear that users would be forfeiting some consumer protection by using it.
The company confirmed to Telegraph Money that Section 75 protection did not apply to bookings made through its website but said customers could complain to it directly if they had problems with their hotel. In this instance Hotels.com gave Mr Bates a £60 voucher as a gesture of goodwill.
“We’re sorry to hear that the customer was not happy with their experience at this hotel,” a spokesman said. “Where possible, we work with our hotel partners to offer a different choice of room, but in this instance that option didn’t work for the customer and they chose to relocate to a different hotel. We apologise for the inconvenience.”
Breaking the chain
Martyn James of Resolver, the consumer complaints service, said there were many occasions when buyers could be unknowingly left without Section 75 protection.
“The rules say if you go through a third party you’re not covered, as this breaks the chain,” he said.
“But it’s clear that the vast majority of people don’t know about this quirk in the legislation and may think they have some consumer rights when they don’t. “Another common example of this is paying for concert tickets. If you buy direct from the venue and spend more than £100, you’re covered. But if you buy through a ticket agency, you’re not.”
Mr James said this was a growing problem as more goods and services were being bought online.
“The way we shop has fundamentally changed. Buying online is now the principal way for many of us,” he said. “But using your credit card through money transfer services such as PayPal is currently considered to break the chain.
"Buying through price comparison websites is, in theory, also not covered. But luckily insurance and banking services are not ones that people usually want to make Section 75 claims about.
“It’s clear that regulations such as Section 75 need to be updated so that they factor in the way we live, shop and browse today.”
Travel booking websites have also come under the spotlight for unfairly pressuring consumers into making purchases.
The industry watchdog, the Competition and Markets Authority, found multiple instances of bad practice on booking websites. They often suggest to users that multiple customers are looking at the same room as them, potentially giving a false impression of the demand for accommodation.
In many cases consumers are told that a room is the last available, increasing the pressure on them to book immediately and not shop around further.
Another common tactic is to claim the room is available at a discounted rate, even if the higher rate was available only briefly.