How to understand section 75 of the Consumer Credit Act

Using a credit card is often a great opportunity to build your credit and spread the cost of shopping. However, one of the great benefits includes Section 75 of the Consumer Credit Act, which protects your money if you buy a faulty product or the company goes bust. 

Shopping with a credit card can also allow you to earn great rewards through airmiles and cashback, but one of the most significant benefits is the protection you are given if something goes wrong. Which is why it’s a good idea to consider using one, particularly if you are planning on making a big purchase or travelling abroad.

What is Section 75 of the Consumer Credit Act?

Section 75 of the Consumer Credit Act 1974 is a law that protects you when using your credit card to buy goods or services costing over £100 - £30,000. The law states that your credit card company is just as responsible for any breach of contract as the retailer or seller.

This means your credit card provider could be just as responsible for what you buy as the seller. So, if a product is faulty or doesn’t arrive, and you are unable to obtain a refund from the person you bought it from, you can approach your credit card firm for the refund instead.

What does Section 75 cover?

Section 75 of the Consumer Credit Act covers you when you buy a product or service if:

  • The item is faulty or damaged – for example, you bought new headphones but cannot use them as they are already faulty

  • What you get isn’t as described – you bought a yellow three-seater sofa and you get a two-seater instead

  • Your item never arrives – you are still waiting two months after you bought your new shoes

  • The company goes bust before you get what you paid for – for example, a holiday firm goes bust before you go on your trip

When does Section 75 apply?

If you buy goods or a service on your credit card you get the benefit of Section 75 consumer protection:

  • When the item costs over £100 and no more than £30,000

  • As long as you bought the item using a credit card or store card

  • Regardless of where in the world you bought the item

  • Even if you have closed your credit card account since you made the purchase 

Section 75 of the Consumer Credit Act and deposits

Section 75 covers the full price of an item even if you only pay a small amount on your credit card.

Let’s say you were booking your dream holiday. The total price is £5,000, but you only need to pay a deposit to book the trip, so you use your credit card to pay a £150 deposit. You then pay for the rest of the cost on your debit card or via a bank transfer. If the travel firm goes bust before your trip, you could make a Section 75 claim to your credit card provider for the full £5,000.

Why do credit cards offer purchase protection?

Credit card providers give you purchase protection because they are required to do so under the law.

In 1974 the government decided to tighten the law and extend your rights when using your credit card. Known as the Consumer Credit Act, this included Section 75. It states that your credit card purchases must be protected if they cost more than £100 and less than £30,000.

When won’t I get credit card purchase protection?

The law is very clear on what Section 75 of the Consumer Credit Act covers. However, when using your credit card to make a purchase, it’s important to know what you’re not covered for under Section 75, such as purchasing land, taking out cash, or purchases made by an additional card holder who is not the primary account holder.

Key points to remember: 

  • Purchases must be valued between the specified amounts of over £100 - £30,000 (so purchases of £100.01 would be covered, but £100 wouldn’t be)

  • Items purchased solely by debit card

  • Products or services you buy via a third party such as Amazon Marketplace

In some cases where you’re not covered by Section 75, it’s still important to pursue your rights as you might be covered by other laws, such as ATOL (Air Travel Organiser’s Licence). This protects most air package holidays sold by travel companies in the UK. 

When can I make a Section 75 claim?

If something goes wrong with a purchase, you should try and sort it out with the retailer first. Credit card companies will not step in unless you can prove you tried to resolve things directly first.

Claims should be made within six years of purchase, and it’s important to keep receipts when possible to help with your claim.

Try to keep a record of your dealings with the company in question. If you can’t reach a satisfactory resolution with them then you should start a Section 75 claim.

If the company has gone bust, you can go straight to your credit card firm with a claim under Section 75 of the Consumer Credit Act. 

How to make a claim under Section 75

Contact the seller

You have a legal right to get your money back via Section 75 of the Consumer Credit Act so don’t be afraid to make a claim.

Contact your bank

You will need to contact your credit card company. To be clear, that is the bank, building society or company that provides your credit card, not Visa or Mastercard.

So, if you have a Barclays Visa card you need to make your claim with Barclays not Visa. 

Complete a claim form

Contact your credit card provider and ask them for their Section 75 claim form. Make it very clear that you wish to make a claim under Section 75 of the Consumer Credit Act. You will need to provide evidence of the purchase and proof you have attempted to get your money back from the retailer.

How long have I got to make a Section 75 claim?

You need to make your claim within six years of the purchase. If you are claiming for an item that didn’t arrive you should make your claim when it was due to arrive.

What to do if your credit card company rejects your claim

If your credit company doesn’t accept a claim under Section 75, you’re entitled to pursue this claim further by contacting the Financial Ombudsman Service for free. Founded in 2001, they were set up to deal with complaints between customers and businesses.

They will assess your complaint and claim, and based on the evidence, which could include necessary photographs they will make a decision as to whether you are entitled to a replacement item or your money back.

19th May 2020