If you pay for something using your credit card, you get valuable consumer protection. But what do you get and how do you claim it? Read my guide to understanding your credit card rights under Section 75.
Understanding your rights under Section 75
If you buy something with your credit card, there’s a rule called Section 75 (of the Consumer Credit Act) which means you may be able to get a refund if there is a problem. In legal terms, the credit card company is equally liable with the retailer or supplier. It doesn’t mean you’re guaranteed to get a refund from the card company, if you’re not happy with the product or service you’ve bought, but in some circumstances you may be able to.
When you can claim under Section 75
You need to be able to tick all the boxes below in order for Section 75 to apply:
- The purchase price must be £100 – £30,000. This is generally taken to relate to the cost of an individual item rather than the total cost. So if you bought a suit for £110, you’d be able to make a claim against the credit card company if it didn’t arrive, was faulty or the company went bust before you’d received the suit. However, if you bought a couple of different items for £60 each, you may not be able to make a claim.
SAVVY TIP: Some credit card providers will go beyond what the law requires and may ignore this rule and give you a refund even if the individual items you’ve bought cost less than £100.
- The deposit or full price must be paid by card. It doesn’t matter whether you only pay the first £10 of a £100+ purchase on your card (and the rest in cash or via your debit card). You can make a claim for a refund of the whole lot under Section 75 if there’s a problem.
- You pay by credit card. This means that debit cards aren’t covered by Section 75 and neither are charge cards (where the bill is cleared in full each month).
SAVVY TIP: Store cards are generally covered by Section 75, although in some limited circumstances they may not be.
How to claim a refund under Section 75
It’s a good idea to contact the company you bought the goods or service from, and try and get a refund from them first. However, if they don’t respond or if they’ve gone bust, you should contact the credit card company.
- Write to or email the credit card company. Tell them what the problem is (the goods didn’t arrive, they were faulty or the company went bust).
- Explain when you bought the item and how much it cost.
- Tell the credit card provider if you have already tried to contact the retailer/supplier (include copies of any letters or emails to back this up).
- Explain that the credit card company is ‘jointly and severally liable’ under Section 75 of the Consumer Credit Act.
- Tell the credit card company what you would like them to do.
- Give the a deadline by which they should respond (14 days is reasonable).
If your Section 75 claim is rejected
Credit card companies sometimes wrongly reject Section 75 claims. If your claim for a refund is rejected – and you believe you meet the criteria I’ve described above – go back to the credit card provider and tell them you don’t agree. Say that if you don’t get a refund, you will take your complaint to the Financial Ombudsman Service. That normally helps to focus their minds!
When you can’t claim under Section 75
There are some situations when paying by credit card may not be enough ensure you can make a claim against the card company to give you your money back. The situations include:
- When you pay for someone else. If you buy a present for someone, you should be covered under Section 75, but if, for example, you paid for a car that your partner bought (so it was in his/her name), you probably wouldn’t be covered by Section 75 because the contract was between your partner and the garage.
SAVVY TIP: Because this area of law is complex and Section 75 can be a grey area, it’s worth putting a claim in if you’re not sure. Even if you get turned down by the credit card company it may be worth taking your complaint to the Financial Ombudsman Service. This is a free to use complaints service if you have a complaint about a financial company that they can’t resolve.
- If you buy airline tickets via a third party. This isn’t cut and dried but the Financial Ombudsman Service takes the view that if you buy airline tickets from a third party (such as a travel agent or online travel company), you wouldn’t be able to claim under Section 75 if the airline went bust. That’s because it believes the ‘third party’ (the travel agent) wasn’t contracted to supply the flights, just to book the tickets. However, the consumer organisation Which? disagrees and says you should be able to claim.
SAVVY TIP: It’s worth knowing that holiday websites are changing. Previously many of them would act as aggregators and would take your payment and effectively book the different elements of your holiday for you. However, these days quite a few of them receive a commission when you click on the airline/hotel or car rental company’s site. You make the booking directly with the provider and the online holiday site doesn’t act as a middle party. In that case the chain of ‘credit card holder-card company-supplier’ hasn’t been broken, so there should be no problem with you making a claim. However, it is a bit of a grey area so you’re definitely better off making a claim than thinking you won’t be eligible.
- You pay via a third party payment system. If you pay via Paypal you’re not normally covered under Section 75, but in some circumstances online retailers have Paypal ‘embedded’ in their site, in which case it may not be classed as a third party. Again, it’s a complex area so it’s definitely worth making a claim and, if necessary, complaining to the Financial Ombudsman Service if your claim is turned down.
SAVVY TIP: Paypal runs its own buyer protection scheme, which is essentially its version of ‘chargeback’, where the transaction is reversed. There are time limits by which you have to make a claim. In Paypal’s case, it’s 45 days from when you made the payment.
- You are the second-named cardholder. If you’re the second named on a credit card account, the Financial Ombudsman Service takes the view that there would be no basis for a claim under Section 75 if the secondary card holder bought something that was solely for their use (i.e. not for the use of you and the main named person on the account).
SAVVY TIP: Two important points; first of all, the main cardholder must make the claim under Section 75, even if they had nothing to do with the purchase and my research showed that a number of credit card providers were unaware that secondary cardholders were covered by Section 75, so be prepared to quote the law at them!
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