Protect your purchases with Section 75

Published: 13/01/2015

If you make a single purchase on your credit card of £100 to £30,000 your credit card company must protect this transaction under the Consumer Credit Act 1974. This means should the company go bust or the item you buy is faulty or not as described, the credit company is equally liable to refund you and this guide will explain how you go about making such a claim.

The benefits of paying on credit

Credit cards can be dangerous; equipping someone who hasn’t got funds readily available the ability to spend and splurge to their hearts content. However the Section 75 law is a definite positive as it gives you further protection should something go wrong with the item you have bought.

The law reads:

75. – (1) If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to transaction financed by the agreement, any claim against the supplier in respect of misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier shall accordingly be jointly and severely liable to the debtor.

Let us translate this legal gobbledegook: If you buy something from a retailer with a value of between £100 and £30,000 on your credit card and they either fail to deliver or the item is not as it should have been, you can make a financial claim against the creditor (i.e. who you have your credit card with) as they are just as liable as the shop!

The idea behind Section 75 is to prevent you from ever being in a position of paying for something that you never received or that was substandard.

So what’s covered?

In order to qualify for Section 75 protection, the item you purchase must cost between £100 and £30,000. This must be the cash value for a single item, not a total bill (e.g. if you buy a flight and your outbound journey costs £99 and your bound journey costs £29 you would not be covered as neither item cost between £100 - £30,000).

You don’t even have to pay the total amount on your credit card; providing the amount you pay (e.g. the deposit) is more than £100 you are still covered for the total amount (just make sure you keep all your receipts).

It’s also important to know that it isn’t just credit card providers which are required to offer this kind of protection. It also applies to:

• Store cards
• Store instalment credit
• Car finance agreements (not hire purchase).

You are also covered if you have paid off your credit card or closed your account.

So what’s not covered?

As explained, items that cost either less than £100 or more than £30,000 are not covered by Section 75. There are also a number of other purchases where claiming may be more difficult including:

• Goods/services purchased by a secondary cardholder which wasn’t of benefit to the primary cardholder (e.g. a solo flight)
• Goods/services purchased through an intermediary such as a travel agent, discount sites (e.g. Groupon) or PayPal
• Where the creditor and supplier/retailer are the same (e.g. a catalogue)
• Hire purchase agreements.

Making a Section 75 claim

To make a claim under Section 75 of the Consumer Credit Act 1974 you will need to contact your credit card company. This is the lender you have the credit or store card with (e.g. Barclays, HSBC) and not Mastercard or Visa. If you are claiming for something purchased on instalment credit, you’ll need to contact the finance company not the retailer.

State that you wish to make a claim under Section 75 of the Consumer Credit Act and the lender should send you a claim form. If you encounter any kind of resistance, like being told to reclaim directly from the retailer, stay firm and explain that, under Section 75, as the creditor they are jointly liable and you wish to reclaim the full amount you are entitled to.

If your credit provider continues to be difficult, contact the Financial Ombudsman and make a complaint. It will then investigate and, if it deems the credit provider has treated you unfairly or failed to meet industry practice and/or adhere to the laws of Section 75, it can order the creditor to refund you.

Content correct at time of publication