Using a credit card has many benefits, but one of the biggest is the valuable protection it provides for purchases. If it turns out that something is wrong with the goods or service you have bought, you can often claim your money back through Section 75 of the Consumer Credit Act.
What is section 75 of the Consumer Credit Act?
Section 75 of the Consumer Credit Act 1974 is a legal protection that was put in place in the 1970s. It means that your credit card provider is jointly liable with the retailer if something goes wrong with a purchase that cost more than £100 and less than £30,000. Under section 75 you are entitled to a refund if:
- The product you bought is faulty
- The product isn’t the same as the description
- The product or service is not delivered as promised
- The trader or retailer goes bust
Section 75 applies to most credit card agreements, including store cards and some car finance agreements.
How does section 75 of the Consumer Credit Act work?
If you buy something costing more than £100 on your credit card and that item doesn’t arrive, it turns up faulty or the supplier goes bust, section 75 allows you to claim a refund from your credit card provider. This applies even if you have since cancelled your credit card.
Section 75 will only cover you if you have spent more than £100 and up to £30,000. But it will still cover you if you have only paid a deposit on your credit card, as long as the overall cost of the goods was more than £100. If you bought a new laptop for £300, for example, but only paid a £50 deposit on your credit card and paid the rest in cash, you would still be able to claim back the full £300 if the laptop was faulty or didn’t arrive.
What is covered by section 75 of the Consumer Credit Act?
Providing your credit card purchase cost more than £100 and not more than £30,000, you will have protection under section 75. However, if you bought two items that cost more than £100 combined but each cost less than £100, you would not be covered. Let’s say, for example, you bought two pairs of shoes costing £60 each. Even though the total cost is £120, because each item costs less than £100, you wouldn’t be able to claim on section 75. This also applies to items with a delivery charge - so if the item you bought cost £96 but there was a £5 delivery fee, you wouldn’t be protected.
Complications can also arise if there are multiple cardholders. In order to guarantee protection under section 75 it is usually safer for the main cardholder to make the purchase, rather than the secondary cardholder. If, for example, the secondary cardholder paid for a flight on the card but the main cardholder wasn’t travelling, it is unlikely you would be able to make a claim if the airline went bust. This is not to say you would never be able to claim however. If the secondary cardholder bought a gift on the credit card for the main cardholder or it was clear the main cardholder would benefit from the purchase, such as a family holiday, the purchase should still be covered under section 75.
Caution should also be taken if you are booking a holiday or flights for a friend and you are not travelling. It is unlikely you would be covered under section 75 in this instance, as the flights would be in a different name to you, the cardholder. It’s worth bearing this in mind if you are travelling as a group, too. If you were to pay for the flights and everyone else paid you in cash, you may be the only one to benefit from section 75 protection. So if the airline went bust, you might be refunded for your flight ticket but your friends could be left out of pocket. This is a bit of a grey area so if you want to be 100% certain you will be covered, each person should pay separately on their own credit card. Note that if you are travelling as a family, it is more likely you would get the full amount back. You can learn more about this in our podcast - 'The currencies investors should be watching and the section 75 loophole'.
Are purchases over £30,000 protected?
If you buy something on your credit card that costs more than £30,000, you won’t be covered under section 75. However, section 75a offers additional protection and means that certain credit agreements of between £30,000 and £62,260 are covered. These are known as linked credit agreements or debtor-creditor-supplier agreements and there must be a clear link between the money and the purchase. An example of this would be if you bought a new car costing £50,000 on finance through a car dealership - because the finance agreement is specifically for the car, you would be covered.
If you are considering getting a credit card to make a purchase, check out our article 'Compare the best 0% purchase credit cards'
Are purchases abroad covered under section 75?
Any purchases you make on your credit card overseas will still be covered by section 75, providing they cost more than £100. This also applies if you have bought something from an overseas website.
Are payments made via a third-party provider covered under section 75?
If you are buying goods through a third-party provider such as a travel agent, ticket agent, PayPay or WorldPay, section 75 may not apply. This is because it can break the link between the credit card company and the item purchased and card providers can get out of paying your claim. It is therefore safer to buy directly from the company supplying the goods or service if you can.
That said, PayPal has its own buyer protection scheme called PayPal Buyer Protection, so you may be able to claim through that if there was a problem with your purchase. However, it is not as robust as section 75 so you are generally still better off paying on credit card if you can.
What isn’t covered by section 75?
There are a number of areas where you won’t be able to benefit from Section 75 protection. These include:
- Land purchases
- Hire purchase agreements
- Payments through a third-party provider
- Purchases by a secondary cardholder (in some cases)
- If the credit card provider is also the supplier
- Cash advances (see below)
Am I protected by section 75 if I withdraw cash on my credit card?
If you withdraw cash on your credit card at an ATM - known as a cash advance - you won’t be covered by section 75. This is because there will be no link between the card provider and the retailer you went on to purchase with. Cash withdrawals on a credit card are generally best avoided anyway as you will typically have to pay a fee and interest will be charged from the day you make the withdrawal. Interest rates on cash advances are often very high. If you require access to cash, then a better option may be to look at a money transfer credit card, check out our article 'A complete guide to money transfer credit cards'
How to make a claim under section 75 of the Consumer Credit Act
If you need to make a claim under section 75 and the retailer or service provider has gone bust, you will need to go straight to your card provider. If, on the other hand, you are not happy with the goods or service you have received, or they haven’t arrived, it is usually best to talk to the retailer in the first instance. It is usually quicker to do this, but remember that the card provider is jointly liable, so you can go to your card provider first if you prefer. Keep in mind that this is the company that provides your card - such as Santander or Halifax - and not the company that issues your card (ie Visa, American Express or MasterCard). Once you have contacted your card provider, you should be sent a form to fill in.
In many cases claiming should be straightforward. However, if it is taking too long (bear in mind there is no set deadline by which a card provider needs to resolve the claim) or you do not receive the outcome you wanted, you can complain to your card provider. The provider will then have eight weeks to respond to this complaint. If the provider does not respond or refuses to pay out, you can refer your claim to the Financial Ombudsman Service (FOS).
What are my rights when making a claim under section 75 of the Consumer Credit Act?
If you receive any pushback from the card provider, remind the provider that claiming on section 75 is your legal right and you would like to pursue your claim. As well as being able to claim for the cost of the goods or service, you may be able to claim for ‘consequential loss’ which would cover you if you had to spend extra funds as a result of the issue. If, for example, you had paid for tickets to a concert that was cancelled, as well as claiming back the money for the concert, you may also be able to claim for any transport costs, such as a train ticket.
What evidence is needed when making a claim?
When making a claim you will need to provide:
- Details about the goods or service you bought
- Information about when you made the purchase and how much you paid
- Copies of receipts or other proof of purchase to support your claim
- Information about why you are claiming - ie. did the goods arrive damaged or did the company go bust?
- Information about any contact you’ve made with the retailer or service provider
- Details about how much you are looking to claim back
Is there a time limit when making a claim?
Claims should be made within six years of buying the goods or services or, if you didn’t receive the goods, when they were due to arrive.
When is the best time to pay with a credit card?
Paying with a credit card can be hugely beneficial when you are paying for large purchases such as:
- Your wedding
- Home improvements
- A new car
- New furniture
- White goods
- Flights or a holiday - providing they are not booked through an agent
Using your credit card means that as long as you meet the requirements, if something goes wrong, for example your wedding venue floods, you will be able to claim back the cost - even if you only paid a deposit on your card. Knowing you have this protection can provide valuable peace of mind.
It is also a good idea to use a credit card to pay for items bought online - including overseas purchases - as you will be protected if the goods don’t turn up, they turn up not as described or they arrive damaged.
I paid by debit card - am I covered by section 75?
If you paid for goods using a debit card, you won’t be covered by section 75, but you may have chargeback protection. Chargeback is not legal protection, so not all card providers will offer it, but it works in a similar way to section 75. So if you have bought goods on your debit card and they turn up faulty or not at all, or the company went bust, you may be able to make a claim.
There is a £10 minimum spend if you have used a Mastercard card to make a purchase, but there is no minimum spend with Visa or American Express. This makes chargeback useful if you are buying something for less than £100, as section 75 will not cover you. However, similar to section 75, if you use a debit card to make a purchase with Paypal, it is unlikely you will be able to claim through chargeback.
You will usually need to make a chargeback claim within 120 days from when the item was bought or when it was due to be delivered. However, if you are buying something for a future date - such as flights - you may be able to claim within 540 days. To make a chargeback claim you should contact your card provider. Be aware that there is no deadline by which your claim needs to be resolved, but if the process is taking a long time or you are not happy with the outcome, you can go to the Financial Ombudsman Service.
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