Amazon's New Direct Bank Payment Feature Raises Consumer Protection Concerns
Amazon has unveiled a new payment feature that allows customers to transfer money directly from their bank accounts to retailers, but consumer rights experts are advising shoppers to proceed with caution. This method eliminates the need to input debit or credit card details, potentially speeding up purchases for users seeking convenience.
However, specialists warn that this direct bank transfer option can significantly weaken consumer protections that are typically available through traditional card payments. Key safeguards like Section 75 and chargeback mechanisms may not apply when using this new service, leaving customers more vulnerable in cases of disputes or retailer insolvency.
Understanding the Protection Gaps
Section 75 of the Consumer Credit Act provides robust protection for purchases made with credit cards in the UK. Under this provision, consumers can claim a full refund from their card provider if goods are faulty, services are not delivered, or if the retailer goes out of business and refuses reimbursement. This legal protection applies to purchases between £100 and £30,000.
Chargeback offers another layer of security, allowing customers to request refunds from their bank or card issuer when problems arise with purchases made on either debit or credit cards. Unlike Section 75, chargeback operates as part of voluntary schemes managed by card networks including Visa, Mastercard, and American Express rather than being a legal requirement.
Expert Recommendations for Safe Shopping
Consumer rights specialist Scott Dixon has advised Amazon customers not to abandon the new payment method entirely but to use it judiciously. "It's not ideal for all purchases," Dixon emphasized in comments to Sky News. He recommends shoppers carefully consider their trust in the seller and their ability to absorb potential losses before opting for direct bank transfers.
For purchases exceeding £100, Dixon strongly suggests using credit cards to benefit from Section 75 protection, noting that paying at least the deposit with a credit card provides the strongest consumer safeguards available. For transactions under £100, he recommends debit cards to take advantage of chargeback protections, which typically cover purchases for up to 120 days from the initial transaction date.
The introduction of this payment feature comes as Amazon continues to expand its financial services offerings, but consumer advocates stress the importance of maintaining awareness about protection trade-offs when embracing new payment technologies.
