Credit card purchase protection

Section 75 of the Consumer Credit Act can offer you purchase protection if you spend on your credit card. Read our guide to what credit card protection can cover.

Section 75 of the Consumer Credit Act can offer you purchase protection if you spend on your credit card. Read our guide to what credit card protection can cover.

Anelda Knoesen
From the Money team
11
minute read
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Posted 12 FEBRUARY 2021

What is credit card purchase protection?

Credit card protection could help you to claim your money back if you use your credit card to buy something and there’s a problem with it – like if the company goes bust or you order an item that doesn’t arrive.

Section 75 is a UK protection regulation that comes under the Consumer Credit Act of 1974. In certain cases it allows the cardholder to get a full refund from their credit issuer on single purchases that cost between £100 and £30,000, and comes with any type of credit card.

Credit card protection and coronavirus

The legislation under Section 75 of the Consumer Credit Act remains the same during the coronavirus pandemic. If you’ve made a purchase that’s more than £100, but less than £30,000, for a single item or service, then you could receive the same credit card protection as you would have previously, depending on the circumstances. 

Find more information on credit cards and coronavirus.

Need to know

Section 75 might only offer protection in certain cases. Whether you can make a successful claim depends on the circumstances, the terms and conditions of your credit card provider, and the Mastercard, Visa or American Express scheme rules. Every case is individual, so don’t assume you’ll be automatically covered.

What does section 75 of the Consumer Credit Act cover?

Under section 75 of the Consumer Credit Act, your credit card provider has equal responsibility with a seller if something goes wrong after you’ve paid for something. Your card provider may refund you, the cardholder, if:

  • An item isn’t delivered to you but you’ve still been charged
  • The item you bought is faulty or damaged and the company won’t refund you or offer a replacement
  • Your item arrives and it isn’t what was described
  • The company goes into administration before you’ve got the item you’ve paid for
  • You’ve bought flights or a holiday with an airline/tour operator that later goes into administration and is unable to refund your tickets
  • You’ve paid for transport and accommodation for an event that is then cancelled
  • The purchase is more than £100, but less than £30,000 

If you’ve paid more than £100 deposit using your credit card on a single item, for example a sofa or holiday, you may have purchase protection on the full item, not just the deposit. 

When are you not covered by credit card protection?

You might not be covered by credit card protection if:

  • Your purchase is £100 or less, or over £30,000.
  • You used a third-party provider, like PayPal, Worldpay or Google Wallet, to pay instead of buying directly. These may have their own buyer protection schemes, but Section 75 usually only applies when payment is made directly to the goods or service supplier, not through third parties.
  • What you bought wasn’t a single item purchased in a single transaction. For example, if you bought three tickets for £90 – paying £270 in total - they won’t be covered. This is because the single item is under £100.
  • The purchase was made by an additional cardholder. To be covered, you might need to show that you, as the primary cardholder, will benefit from the purchase. So, for example, if the additional cardholder used the card to buy you a birthday present, it might be covered, but a pair of designer shoes they’ve bought for themselves might not be. In the case of expensive purchases, it might be wiser to get the main cardholder to pay as they’re more likely to be covered.
  • You use your card for money transfers or other indirect forms of payment, like vouchers bought from a third-party supplier. For example, a H&M voucher bought at the supermarket.
  • The credit card provider and credit facility are the same – for example, catalogue accounts like Next.

Hire purchase (HP) isn’t covered under Section 75, but the supplier still has obligations under the Supply of Goods Act to make sure goods they sell are not faulty and are as described – so you may still have some protection.

Will overseas purchases be protected?

Yes, Section 75 of the Consumer Credit Act applies whether the purchase is made in the UK, abroad or online. You should get the same type of protection, as long as the purchase meets the criteria set out by your credit card provider.

Do credit cards protect holidays and flights?

If you booked a holiday or flight directly with a tour operator or airline, you should be covered by Section 75. But Section 75 doesn’t usually apply if you book through an agent, like Expedia, for example. 

Package holidays aren’t usually covered by Section 75 as they should come under separate ATOL or ABTA consumer protection rules.

When it comes to flights only, you’ll need to buy your tickets directly from the airline and each booking must cost over £100 to qualify for Section 75 protection. Just be careful if you’re using a low-cost airline as each leg is considered a single booking. This means that both your outbound and inbound flights must each cost more than £100 to qualify.

It’s not 100% guaranteed that you’ll be covered by Section 75 or your claim will be successful, so make sure you have travel insurance in place before you go.

Will group bookings for tickets or holidays be protected?

If you’ve booked a holiday, or tickets to an event, on behalf of a group, then technically you should be covered, so long as each individual ticket cost more than £100 and you meet all the other criteria. However, there might be an argument that flights, reservations or tickets under other names aren’t covered by your credit card protection, even if the people you’ve bought them for are paying you back separately for their tickets. Those people may not get their portion of the total back. 
 
If you’re concerned or in any doubt, just ask your group to book individually.

Are cash withdrawals covered by Section 75?

If you use your credit card to make a cash withdrawal, the money you spend won’t be covered by Section 75. This is because there’s no link between the credit card provider and the retailer.

It’s a good idea avoid using your credit card for cash withdrawals anyway, as you’re likely to be charged a fee and interest from the moment you take the money out.

What is credit card deposit protection?

Credit card deposit protection is for products or services you’ve paid a deposit for, but the company then fails to fulfil their promise. For example, the promised goods don’t arrive or the service or event is cancelled. 
 
Common examples include deposits paid towards a holiday, when the airline or tour operator later goes bust. Your deposit is lost, but you may be protected by your credit card provider. Another example would be if you pre-ordered a specific product with a deposit, but then the product wasn’t released or the company went bust.

Can you have additional purchase protection on a credit card?

Some credit card providers offer premium accounts or services that may protect you for larger amounts. These services vary between providers. 
 
Other legislation, which protects credit purchases over £30,000, comes in the form of Section 75a of the Consumer Credit Act. This can cover a higher limit of £60,260, but the regulations are stricter. This form of protection doesn’t apply to credit cards, but instead covers other credit agreements - for example, an expensive car (costing over £30,000) bought as part of a finance agreement through an official car dealer. To get this protection, you must also have tried to resolve the issue with the product or service provider directly, but with no success.

Why do credit card companies offer this protection?

Credit companies are legally obliged to provide purchase protection under Section 75 of the Consumer Credit Act.

How much does credit card protection cost?

Credit card protection is your legal right as a consumer, so you don’t have to pay for it. But don’t just get a credit card for Section 75 protection – it may not always apply.

What debit card payment protection is there?

Debit cards don’t offer payment protection under Section 75 of the Consumer Credit Act, but are covered by something called chargeback. Chargeback could cover you if an item you’ve bought is damaged, faulty or doesn’t arrive.

You’ll typically have 120 days from the date of the transaction to contact your bank to make a claim. You’ll also be expected to provide evidence that the item is damaged, faulty or didn’t arrive, along with proof you bought it.

Unlike Section 75, chargeback isn’t legally binding and your bank doesn’t share joint liability with the seller. When you make a claim, your bank will put in a request to the seller’s bank to claim back the money. The company can always dispute your claim, so there’s no guarantee that your bank will get your money back.

How do you claim money back on credit cards?

To make a Section 75 claim on your credit card, you’ll need to first contact the retailer or company that you bought from. If they don’t get back to you or offer a refund, you can make a claim from your credit card provider – in other words, the card issuer. So, for example, you’d claim from Barclays, NatWest or whoever your credit card provider is, not the payment network like Visa, Mastercard or American Express.

When you contact your credit card provider, you’ll need to state that you’re making a claim under Section 75 of the Consumer Credit Act and include copies of receipts as proof of purchase. You’ll also need to include any emails or letters you’ve sent to the retailer or company you bought from. Just bear in mind that it’s never 100% guaranteed your claim will be successful.

What should I do if a retailer or supplier has gone bust?

If the retailer or supplier has gone bust, your next step will be to contact your credit card provider. You need to tell them you’re making a claim under Section 75 of the Consumer Credit Act.

If you can’t come to an agreement with your credit card provider and you feel your case hasn’t been dealt with fairly or reasonably, you should contact the Financial Ombudsman who will look into your complaint.

What can I do if the retailer won’t pay the bill?

If the retailer hasn’t gone bust but is refusing to cooperate, try contacting your credit card provider. If your credit card provider is also proving to be difficult, take your complaint to the Financial Ombudsman. It’s a free service and could save you the cost of taking your case to the small claims court.

What is the Financial Ombudsman Service?

The Financial Ombudsman Service (FOS) is an official, independent body set up by Parliament to settle complaints between consumers and financial businesses. The FOS will decide if a customer has been treated unfairly and has the legal power to step in and put things right.

The FOS is a free service available to all UK consumers and is totally impartial. Its job is to listen to both sides of the story, weigh up the facts and tell you and the business what can be done to put things right. If you or the business don’t agree with the FOS assessment of your case, the FOS has the power to make a legally binding final decision.

You should only take your complaint to the FOS if you can show proof that you’ve first tried to settle the dispute with the retailer or credit card provider. If the privider refuses your claim or you haven’t heard back from them within eight weeks, you can then take your complaint to the FOS.

You can contact the Financial Ombudsman Service via email or by filling out an online form. Alternatively, call 0800 0234 567 between 8am and 5pm, Monday to Friday.

Can I compare credit cards with protection?

As credit card protection is a legal requirement under Section 75 of the Consumer Credit Act, you won’t need to compare credit cards based on this protection. All credit card providers are required to meet these standards. 
 
However, if you’re looking for additional protection, you may be able to find this with certain premium credit card services. This is worth considering if you’re likely to make purchases over the £30,000 limit for credit card protection.

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