This piece of legislation makes credit card providers equally liable (with retailers) for ensuring that people get what they paid for.
We can make a section 75 claim directly to our credit card provider and they will decide whether to refund the money.
However, there are some instances where credit card purchases are not covered by section 75 such as those made by an additional cardholder or through an intermediary, plus purchases of less than £100.
What is section 75?
Under section 75 of the Consumer Credit Act 1974, credit providers and sellers have the same level of responsibility if something goes wrong with a purchase.
This means that a credit cardholder can claim money back from their credit card provider even if the supplier, retailer or trader is being unresponsive or it doesn't look as though they are going to refund the money.
Most credit card agreements will be covered by section 75 protections along with:
- Store cards
- Store instalment credit cards
- Some car finance agreements (excluding hire purchase)
The protections apply to goods and services purchased in person, online, by telephone or mail order, plus it covers foreign transactions for goods delivered to the UK.
Customers can claim under section 75 on items that are:
- Not delivered - such as a flight booked through an airline that has gone bust
- Faulty - such as a new TV that doesn't work
- Damaged - such as plates purchased online that arrived broken
The right to a refund under section 75 is only applicable for purchases between £100 and £30,000 within six years of purchase.
There were extra protections brought into the Consumer Credit Act in 2011 as part of the Consumer Credit Directive that offers cover if the goods or services cost more than £30,000 and less than £60,260, but most people are covered under the original section 75 legislation.
As we explain in more detail below, there are some factors to be aware of when considering whether section 75 is applicable:
- A customer must have a direct link to the creditor and the supplier, so purchases through intermediaries are not protected.
- Additional cardholder purchases may not be covered because the chain of purchase between the customer, creditor and supplier is not complete.
- Cash withdrawals don't count when it comes to section 75 because the link between the credit card provider and the supplier has been broken.
- The £100 threshold covers the value of a single item and not the combined value, so if a speaker worth £90 was faulty but it was bought in conjunction with another item worth £50, the customer would not be protected under section 75.
Section 75 claims are examined on a case-by-case basis by credit card companies.
If customers are not happy with the way a claim is handled, they can make a formal complaint to their provider. If there is no resolution after eight weeks, that claim can be escalated to the Financial Ombudsman Service.
Making a claim under section 75
To get money back under Section 75 cardholders first need to contact their credit card provider (Barclaycard, NatWest, Capital One etc.) and tell them they intend to make a claim.
The law is very clear: credit card providers and retailers are equally liable for the delivery of goods.
However, the credit card provider will usually ask that the consumer make all possible efforts to first resolve the issue with the retailer.
There is no requirement that customers need to have come to a stalemate with the retailer before approaching their credit card provider under section 75, so customers could get in touch with their provider before the retailer has made a final decision - this is especially useful if the retailer seems to be stalling or providing false information to try and put customers off pursuing a refund.
To make a claim under section 75, customers must:
- Ask their credit card provider for a claim form and be explicit that they're looking to make a claim under section 75 to avoid confusion.
- Include as much detail in the claim as possible, with evidence of the problem along with information about attempts customers have made to resolve the issue directly with the retailer.
- Wait for a response from the credit card company. If the case is rejected, customers have six months from the date of the rejection to escalate the case to the Ombudsman.
There's more detail about how the Financial Ombudsman Service process works on their website.
Even though section 75 rights are becoming well known, there are still plenty of cases where credit card providers don't provide accurate information about a customer's rights or handle their complaints in an effective manner.
In case the claim ends up being escalated to the Ombudsman, it's important to keep all correspondence (with both the retailer and the credit card provider) to prove there is a valid claim under section 75.
Customers have six years from point of purchase to make a claim under section 75, although it obviously becomes more difficult to prove with the more time that passes.
Extra protections under section 75
In addition to the basic rules set out above, section 75 legislation has been refined over the years by legal precedents.
This means cardholders may be entitled to more protection and it at least means there are precedents to draw on when making a claim that might not seem as straightforward as the ones we've already discussed.
1. Goods purchased from abroad
In 2007, a ruling by the House of Lords defined that section 75 has no territorial limitations and, therefore, cardholders who use their credit cards to make purchases abroad are protected in the same way as in the UK.
The ruling now means that as well as in the UK, purchases made on a credit card may also be covered under section 75 when:
- Goods or services are purchased from a foreign supplier whilst the cardholder is abroad
- Goods or services are purchased from a foreign supplier for delivery to the UK
- Goods or services are purchased from a foreign supplier or agent who is temporarily in the UK
Other factors may affect whether a claim is successful here, such as whether the purchase was made directly to the supplier or if an intermediary was used (more on this below).
2. Partial payments
Customers are covered under section 75 even if they only pay for part of a product or service via their credit card.
For instance, if someone buys a dress and pays £100 by card and £500 in cash, they're covered for the full £600.
Additionally, even if they've only paid £10 on a credit card, as long as the full purchase price is more than £100, cover will still apply for the full amount.
Another example would be paying just the deposit for a holiday on a credit card, as long as the full holiday price is over £100.
The key here is the overall value of the goods and the fact that at least some of it was paid on the relevant credit card.
3. Only partly supplied services
While not an explicit rule of Section 75, there may be cases where partly supplied services could be covered under the legislation.
An example of this could be where a year's membership to a golf club was purchased, but the golf club went out of business and closed its facilities after only 3 months.
In such cases, credit card providers may choose to refund the membership in full or cover the cost of a replacement elsewhere - however, this is not guaranteed.
Remember that section 75 rulings are made on a case-by-case basis and, just because all the conditions are met for a section 75 claim, it doesn't mean that every credit cardholder will be able to get a refund for a partly delivered service.
4. Individual items bought as a set
Individual items that cost less than £100 but have been bought as a set costing more than £100 are covered.
For example, if someone buys a book of ten boat trip tickets for £220 and makes three trips before the boat company goes bust, they can still claim for the whole £220 even though each ticket is only £22 and 3 x £22 is only £66.
5. Consequential losses
Section 75 cover may even offer a refund for any outlays (known as a 'consequential loss') that were needed as a result of the problem.
For example, we've heard of cases where holidaymakers who were stranded abroad when their airline went bust and bought flights to get home before claiming the amount back under section 75.
Just as we noted above, this also applies when the cardholder has only partially paid for goods on their credit card and settled the rest using a different method (debit, cheque or cash).
Once again, remember that credit card providers take these decisions on a case-by-case basis, so there is no guarantee that consequential losses will be covered - it's down to the customer to show a link between the original loss and any others incurred because of it.
What's not covered under section 75?
Section 75 is worded clearly in law and requires a direct relationship between the consumer, credit card provider and retailer.
Various rulings have demonstrated that customers are not covered by section 75 if that chain is disrupted, and there are some key examples of this that will affect many credit card holders.
1. Third party payment systems
Completing a credit card transaction through a third party payment service means that the credit card provider and the seller are no longer in a direct relationship so are not equally liable.
This happens with payment services such as PayPal, as well as Amazon Marketplace, WorldPay and Google Pay.
They create an extra link in the chain and so, when PayPal is used for payment, there is no direct connection between the bank of the customer and the bank of the seller to qualify for consideration under section 75.
It can be worth attempting a claim in these circumstances, however each provider will have their own refund protocols, so going through those first might be more useful.
Some of these services do offer their own buyer protection though, such as PayPal's protection for buyers and, while the level of protection isn't as strong as section 75, they can be safer in certain situations than paying directly.
Shopping on eBay or Amazon Marketplace with private sellers, or on smaller websites for items under £100, are good examples of this.
2. When additional cardholders pay
A purchase made by an additional cardholder technically breaks the chain because there is no direct link between the cardholder and the supplier.
So, whenever larger purchases are involved, it's better to purchase using the main credit card rather than the additional card to be afforded protection under section 75.
There are caveats to this if the additional cardholder buys something that is in both parties' names such as an annual gym membership from a company that subsequently collapses.
However, it's important to remember again that credit card providers will deal with each case as it comes - and if they can argue section 75 cover doesn't apply because it was purchased on an additional card, they usually will.
Customers can still take the case to the Financial Ombudsman Service and perhaps get a positive solution, but the law in this area is murky, so customers are unlikely to get the answer they want.
3. Travel agents
Travel agents are regarded as an additional link in the chain, with money going first to them and then to the travel company themselves.
This breaks the link between the customer, credit card provider and the company actually providing the service (the airline or hotel or package provider).
It's important to check, though, that the travel agent is truly a third party (i.e. not just the airline in disguise). If they are the ones actually providing the service, the consumer may still be protected.
4. Paying by cash
If someone withdraws cash from a credit card (which is inadvisable due to the high cost involved) and uses it to pay for an item it won't be covered under Section 75.
The same goes for credit card cheques, although those are much rarer these days.
Cover for purchases under £100
Purchases costing £100 or less, paid for with a Visa or MasterCard credit or debit card, can be reimbursed using chargeback if the items ordered don't arrive, are damaged, look different from the description or the firm selling them goes bust.
When making a chargeback claim it's important to remember that the onus is on the customer to raise the problem as early as possible, usually within 120 days after the problem was first noticed.
Those wishing to make a chargeback claim must contact their bank, who will contact the supplier's bank to initiate the process.
If a bank refuses to pursue a chargeback then customers can take their case to the Financial Ombudsman Service.
Section 75 cover without a credit card
Those with a bad credit rating, who've been refused a credit card, may be interested to know they can access the same peace of mind that section 75 offers under the following schemes:
- The CashPlus Prepaid MasterCard - It's a prepaid card, meaning cash needs to be loaded on to it before use. It's one of the few prepaid cards to offer purchase protection, something akin to section 75, but note this is not legal protection (more information here).
- Chargeback - As mentioned above, it's not section 75 cover but Visa, MasterCard and American Express all offer chargeback services and debit cards are included in this. The issuing bank can regain the value of a payment made from the supplier's bank to pass back to a consumer's own account.
- Denied Boarding Regulations - Again, not section 75 but if the problem is a cancelled or delayed flight it might be possible to get money back with these rules originally brought in while the UK was part of the European Union and transposed into UK law after Brexit.
These processes can be more cumbersome than section 75 but, for those who can't access those protections, they could be a useful fallback in certain situations.
For those seeking specific help or information on their rights, an advice agency such as Citizen's Advice would be able to respond directly and give more in-depth information.
Summary: Useful consumer protection
Section 75 is a powerful tool that credit card holders should be aware of.
Thanks to the link between customer, credit card provider and supplier, we can often get a refund if something is wrong, even if the retailer doesn't want to admit to their mistakes.
However, it's worth reiterating some of the downsides of section 75:
- Credit card companies decide on a case-by-case basis whether to approve a claim
- If the chain is broken through an intermediary like WorldPay or a travel agency, customers will not be covered
- Additional cardholders are unlikely to be covered
- Cash withdrawals for purchases are not covered
The key to succeeding in a section 75 claim is to have all the evidence available in the form of receipts and emails, especially if the seller admits they were at fault.
Remember that it's possible to escalate claims to the Financial Ombudsman Service, although it's not a quick fix and doesn't guarantee success.