Paying for things on your credit card can give you some valuable extra protection if things go wrong with your purchase. Read on to find out more about your consumer rights Section 75 of the Consumer Credit Act 1974.
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If you can afford to pay off your balance in full every month, then using a credit card can give you some really useful benefits thanks to something called Section 75.
What is Section 75?
Section 75 is a UK legal protection that kicks in if you use your credit card to buy something (goods or services) that costs between £100 and £30,000.
It can help you get your money back if something goes wrong with your purchase.
What does this mean for you?
Let’s say you use your credit card to pay £650 for a new laptop.
And then the retailer goes bust before your shiny new laptop gets delivered.
Now you’re out of pocket and you’re down a laptop. Disaster, right?
Well, not entirely.
Because you used your credit card, you could go to your credit card company and get a refund from them.
What does it cover?
Section 75 can help you in a few different situations, including
- Non delivery of goods, like that online order for a beautiful big fiddle leaf fig plant that never shows up
- Faulty goods e.g. a new TV that doesn’t work
- If the retailer goes bust e.g. flights to Hawaii from an airline that’s gone under
- If there’s a problem with your order and the retailer is ghosting you
When are you protected?
Single item or total Cost?
The things you’re buying need to cost more than £100 but less than £30,000 per item.
So say you’re buying that £650 laptop and you decide to throw in a £20 sleeve to go with it.
Even though your total spend is £670, you’re only covered for the £650 laptop. You won’t be able to get anything back for the sleeve because that item costs less than £100.
Partial Payments count
You only need to pay for part of the item on credit card to get the protection.
A great tip to make use of this is to pay for the deposit with your credit card. That way, you get the Section 75 protection without overloading your credit card limit.
Let’s think back to the laptop for a moment.
If you paid £50 with your credit card and used your savings for the rest you’re still protected for the full £650. In fact, you’d be protected for the full amount even if you paid just 1p on your credit card.
Whether the retailer would let you put just 1p on your credit card is another matter…
Direct purchases only
Section 75 only applies if there’s a direct relationship between you, your credit card company and the retailer or supplier.
If you pay by money transfer, or if the retailer is using a third party payment processing firm (e.g. Amazon Marketplace, PayPal) then that relationship can be broken and there’s a good chance it could void your protection.
Unfortunately, there’s no clear cut list of which payment processors void your protection, so do bear this in mind, especially if you’re making a really big purchase.
And it probably goes without saying, but you’re also not covered if you use your credit to withdraw cash* and then use that cash to make a purchase.
*(I wouldn’t recommend this anyway – I’ve been there, the fees are usually huge!)
Be careful with Paypal
I know I just said that PayPal payments are not covered by Section 75, but if the retailer you’re buying from has a ‘Commercial Entity Agreement‘ with PayPal then you might still be able to make a Section 75 claim.
It’s not generally easy to find this information out, so if you’re unsuccessful with Section 75 then you can still benefit from PayPal’s own Buyer Protection scheme. It’s not a legal protection like Section 75, but it can still offer you some help.
Additional cardholders
So, this part’s a little bit weird.
If you’ve got a card with an additional cardholder then you’ll need to show that the purchase provides some benefit to the primary cardholder for it to be covered.
So a gift for the primary cardholder will probably be fine, but if it the purchase is for the additional cardholder, you’re probably out of luck.
The takeaway is, if you’re making a big purchase you’re much safer doing it from the main cardholder’s card!
Payments abroad do count
Section 75 doesn’t have any territorial limitations, so if you use your credit card abroad, or if you buy something from a company based in another country, you have the same protections as you would in the UK.
So basically, Section 75 will apply when
- you buy something when you’re abroad on holiday
- you’re in the UK and buying something from a retailer in another country to be delivered
- buying something from a foreign retailer or supplier who is temporarily in the UK
So How do I make a claim?
The whole point of Section 75 is that it makes your credit card company as responsible for refunding you as the retailer.
Having said that, your credit card company is probably going to ask you to resolve things with the retailer first.
That’s simple if the retailer or supplier is still in business.
But if you’re struggling to get anywhere with them or if they’ve gone bust, get in touch with your credit card provider and let them know that you’re making a claim under Section 75. They’ll send you a form to fill in and you can take it from there.
What if the credit card company turns me down?
If you’ve complained to your credit card company and still getting nowhere, try contacting the Financial Ombudsman Service.
They’re a free, independent body who’ll look into the details of your case. Decisions are based on the law, standard industry practice, and whether or now you’ve been treated fairly and reasonably.
A final word on credit cards:
You still need to be able to pay off the balance each month so you aren’t hit with interest charges! If you can’t afford to do that then it might be worth steering clear of them.
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