Resolver’s huge guide to Section 75 of the consumer credit act – all you need to know

10 min read
June 01, 2020
credit card claims - section 75

If you’ve paid for goods or services on a credit card and something goes wrong, you’ve got more rights than you think. It sounds a bit legalistic, but section 75 of the Consumer Credit Act can help you get your cash back. And it covers a huge range of problems, for example, if your online shopping doesn’t turn up, the business that’s building your conservatory goes bust or you’ve been tricked into taking out a dodgy timeshare.

Here’s how it works

There’s loads of ways to pay for things when you go shopping. But no matter whether you’re online or on the high street, you have certain rights if you pay by credit card that you don’t have if you pay by other methods.

Paying for goods or services with a credit card (or certain other types of credit agreement), gives you statutory protection if something goes wrong under the Consumer Credit Act. This means you can ask the card provider to give you a refund if the goods or services you’ve paid for don’t turn up or are ‘misrepresented’ (in other words, what you’ve been sold isn’t what you were told it would be).

These claims are made under what’s known as ‘section 75’ of the Consumer Credit Act (section 75 is the section of the act that applies to purchases like this). This is an incredibly useful piece of legislation that many people don’t know about. In theory, you can make a claim if the seller goes bust, or if you’ve only partially paid for the goods on a credit card.

It’s not all straightforward though. Claims made under section 75 have to meet certain criteria and are looked at on a case by case basis by the card provider.

How do I know if I’ve got rights under section 75?

If you pay for goods or services on a credit card that cost between £100 and £30,000, the credit card provider is jointly responsible, along with the supplier of the goods or services, for any breach of contract or misrepresentation. This can involve goods not turning up, items that are damaged or don’t do what they are supposed to do or situations where you’ve been misled by the supplier. You don’t need to complain directly to the supplier either – but we strongly recommend you do. In fact, make the same complaint using Resolver and cut and paste the same information.

You’re even covered if you’ve only paid for a deposit for something on your credit card – and in theory, that deposit amount can be under £100 as long as the total cost of the goods is between £100 and £30,000. In cases like this you’re still covered for the whole value of the item in question. So if you pay a £100 deposit for a sofa that costs £2,000 on your credit card and the rest in cash, if the firm goes in to liquidation the card provider would in theory have to pay you the full £2,000. In fact, the wording around deposits is pretty unclear, so in theory, even if you’d paid a pound on deposit you might be covered.

The rules and the quirks

There are a number of other conditions that must apply before you make a claim:

  • The card provider must be based in the UK, though you can complain about purchases made to businesses overseas.
  • You are only covered if you buy direct from the supplier, not a third party. This is known as the debtor-creditor-supplier relationship and it’s enormously complicated. If in doubt, put a claim in anyway.
  • Debit card payments, cheques and transfers are not covered by the Consumer Credit Act, though you may be able to make a ‘chargeback’ if there’s a dispute with a debit card payment.
  • Though section 75 of the Consumer Credit Act is a great piece of legislation when it comes to consumer rights, it is still open to interpretation. So though it makes sense to pay for items on a credit card, just in case something goes wrong, it does not guarantee that you’ll get your money back.

Other ways of paying and the rights they give you

None of the following ways of paying for things are covered by section 75.

  • Cash: paying by cash is still one of the most popular ways to pay for goods but if something goes wrong, there’s no audit trail to investigate. So you’ll need to keep hold of your receipts. If you make a significant purchase, photograph your receipt and email it to yourself so you can save it – just in case. This also helps if you need to make an insurance claim for items damaged or stolen.
  • Cheque: Lots of people think cheques are dying out, but millions are still issued every year. Cheques work by using the ‘clearing system’ – which is well over a century old. Though the rules have finally been updated and you can usually get the cash on the next working day, the new process is a bit more confusing – and cheques can still bounce. Here’s how cheques work. 
  • Store card: Store cards are good for getting 10% off goods when you first take out the card, but pay them off straight away and cut them up. The interest rates are often extortionate and they’re an added complication when it comes to managing our finances.
  • Debit card: Section 75 doesn’t apply to debit cards, but card providers offer a similar scheme called ‘chargeback’. Chargeback means you can ask your bank to get you back your money if you dispute a transaction (if you didn’t make it or authorise it). Chargeback isn’t a legal right and the timescales vary when it comes to how long you have to make a request – so don’t delay. While not set up to deal with disputes between you and a retailer, it’s worth asking your bank to help you out. And there’s no upper or lower limit. Confusingly, some credit card companies may attempt to ‘charge back’ your cash in the first instance – but you can still make a section 75 claim if it doesn’t work.
  • Bank transfer: You should never transfer money unless it’s to someone you know or trust. As soon as you click send, the money is gone. So if you’ve put in the wrong number – or worse, been conned by a fraudster, you could lose everything. Be wary.
  • Electronic money: In recent years, websites like PayPal allow you to transfer money electronically. The have their own buyer / seller schemes that help mediate if there’s a dispute over a sale and you can complaint to Resolver and failing that to the financial ombudsman too. They are considered to be a third party under the current reading of the rules though, using a credit card to pay through PayPal would mean you’re not covered by section 75.

A few other quirks

Much as we love the Consumer Credit Act, it’s pretty old (1974 originally) and though it’s been updated a few times, the way it’s worded doesn’t always fit with the way we live and shop today.

For example, you may not be covered if you’re paying for something using an ‘electronic payment system’ like PayPal. Many people have a credit card as the main way of paying through these websites. But the credit card companies dispute that the law covers this. I have to say, I don’t agree, but until this is addressed in a court case, it’s likely complaints about section 75 claims and payments by this method will be turned down.  I’d been paying for things using PayPal with a credit card and thought I still had section 75 protection until recently…

Misrepresentation

The tricky part about the law is the bit where it says the goods or services being ‘misrepresented’. That’s a pretty broad term and it’s why there are lots of section 75 complaints. There is a real grey area when it comes to goods being misrepresented or just not meeting our expectations. For example, complaints about timeshares crop up loads when it comes to section 75. In these cases, it’s really important to explain why you’ve been misled when making a complaint.

Buying through third parties

Most frustrating of all is the dreaded ‘debtor-creditor-supplier’ rule. Of all of the money-related things I have to explain this one is particularly tricky to summarise! Here goes…

To paraphrase the law, in order to have the protection of section 75 you have to buy direct from the supplier of goods. If you go through a third party, you’re not covered as this ‘breaks the chain’. The most common example of this is paying for concert tickets. If you buy direct from the venue and spend over £100 then you’re covered. But if you buy through a third-party ticket agency, you’re not.

Seems simple? Well, what if you buy from a third-party ticket agency that is the appointed ‘seller’ of the tickets for the venue or artist? In theory, you should be covered. But in practice, you might not be as it’s still a third party. Yikes.

This wasn’t a massively widespread problem. But then around ten years ago, two things happened. More people became aware of their rights and of section 75 – and there had been a boom in cheap credit. Secondly, the way we shop fundamentally changed. Buying online is now the principal way many of us shop. But the number of providers of goods and services when you shop online are considerably higher.

Take holidays. If you book with the airline direct, you’re covered for your flights if they go bust. But if you’ve gone through a comparison site, you’re not. The same goes for all the online holiday booking companies that aren’t offering their own packages.

It’s also the case for any form of online shopping that aggregates a list of options from other retailers. In theory, buying from Amazon Marketplace might not be covered (though Amazon has its own complaints process). And as I mentioned, using your credit card through money transfer services like PayPal is currently considered to ‘break the chain’ too. Finally, there are whole untested areas. Buying through comparison sites is – in theory – also not covered. In practice, the services (insurance, banking, etc) aren’t ones that people are usually able to make section 75 claims about. But the services are diversifying, so watch this space.

Our tip: Use online sites to compare deals then book direct to ensure you’re covered.

Here are another few key exceptions to section 75

Goods for ‘your benefit’: If you buy a flight on your card for yourself, you are covered under section 75. If you buy one for your partner, then you aren’t. This is because the goods must be for ‘your benefit’. This leads to all kinds of arguments (some a bit dodgy/saucy) that the items bought for partners bring them pleasure so therefore they’re for the cardholder’s benefit.

Deposits: If you buy a car for £10,000 but pay a deposit of £100 on your card, your card provider is liable for the full amount in the event of a successful section 75 claim. Only the rules aren’t clear if the deposit has to be over the £100 minimum payment to qualify or not. No one wants to answer this one. So one retailer might pay out in full if you’ve paid a £2 deposit, whereas others might refuse unless you’ve paid £100 or over.

Timeshares: Some services and goods are ambiguous. For example, if you buy a timeshare, you’ve technically got what you paid for. But what if it’s fundamentally not what you were sold (in a different place, not built yet, falling apart?) Loads of complaints of this nature occur each year. The problem arises because the law uses the term ‘misrepresented’ to qualify for section 75 protection – and that’s widely open to interpretation.

Use Resolver to make a section 75 claim.

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