If you’ve been let down by poor service or left out of pocket when a business you were dealing with went bust, you might be able to make a claim under “section 75” – a very handy piece of consumer protection legislation for when you’ve paid with credit.

Here Telegraph Money explains what section 75 is and what you need to know to make a claim:

  • What is section 75?
  • What does section 75 cover?
  • Common pitfalls with section 75 claims
  • What’s the difference between section 75 and chargeback?
  • How to make a section 75 claim
  • What to do if your claim is rejected

What is section 75?

When someone mentions the “section 75” rules, they’re referring to Section 75 of the Consumer Credit Act 1974, which states that if you buy something or pay for a service using credit, your credit provider will be responsible for the transaction, along with the business or retailer you bought from.

This means that if something goes wrong, you can approach your credit provider to get money back – which can be particularly useful if you’ve had no luck making a complaint to the company you bought the product or service from, or it has gone bust.

While most people will complain to the retailer or trader first, this isn’t a necessity. However, if you end up making a complaint to both the retailer or trader and your credit provider, you can only accept compensation from one.

A credit provider could include a credit card or a store card.

What does section 75 cover?

The legislation applies to credit purchases over £100, but less than £30,000. It doesn’t matter whether you made the transaction in person, over the phone, by mail or online. 

Overseas transactions are covered, too – whether that’s credit card shopping on holiday, or you’ve ordered something from a company outside the UK.

Better still, you don’t have to pay the full amount of the transaction on your credit card to benefit from section 75 protection. 

Let’s use the example of a holiday. Even if you only put a £50 deposit on your credit card and paid the rest in cash, the full cost would be covered as long as the holiday itself cost between £100.01 and £30,000.

This consumer protection can come to the rescue in a huge range of frustrating scenarios, including:

  • A company going bust before you receive an item or service you’ve paid for
  • Not receiving an item or service you have paid for
  • Receiving an item that was faulty
  • Paying for an item or service that was not as described.

You may also be able to claim for associated or consequential losses – for example, reasonable expenses that you might face after a cancelled event.

If you make a payment through Apple or Google Pay, that will still be covered, but only if it went on your credit card in your mobile wallet.

Common pitfalls with section 75 claims

The scope of section 75 is pretty broad. However, there are some instances where you won’t be covered to get your money back. These include instances where:

  • You didn’t use credit to pay for the item or service (such as a credit or store card)
  • The item or service didn’t cost more than £100 or less than £30,000
  • You only went over the £100 threshold by buying several items
  • You paid with cash you had withdrawn using a credit card
  • You made a purchase from a third party– for example booking flight tickets through a travel agent or shopping at Amazon Marketplace
  • You used a “buy now pay later” (BNPL) service (which is regarded as a third party)
  • A product you bought is faulty but covered by a manufacturer’s warranty – in these cases you need to contact the manufacturer.

There are also some areas where the situation is a little hazy. For example:

Additional cardholders: Section 75 covers primary card holders. For purchases by additional cardholders (such as a partner or child) to be covered, the primary card holder would need to be able to demonstrate that they got some benefit from the transaction – for example, a holiday that they went on. To avoid problems, if you’re making a large purchase, it makes sense for the primary card holder to pay, using their card.

Paypal: To get the benefit of section 75 protection you need to pay the seller directly. Theoretically, that would mean you aren’t covered if you pay through Paypal, even if you are using your credit card. However, there is an exception; if the seller has a commercial entity agreement with Paypal and the payment goes direct to the seller, you should still be protected.

If your purchase doesn’t qualify for section 75, you may still be able to get recompense by persevering with the retailer or trader or by using chargeback.

What’s the difference between section 75 and chargeback?

If your bank or card provider agrees that there has been a breach of contract, it may be able to use chargeback rules to reverse the transaction. This applies whether you paid with a credit, debit or pre-paid card. 

There are no specific value limits for chargeback, which means it can be handy if you’re trying to claim for an amount that’s less than £100, or more than £30,000.

However, banks and card providers aren’t legally obliged to offer chargeback, so there are no guarantees that your claims will be successful. Nonetheless, many people are successful and it may still help you get your money back if your purchase isn’t covered by the section 75 legislation.

How to make a section 75 claim

If you think you’re owed some money back for a product or service that wasn’t up to scratch, you can follow these steps:

  • You can apply directly to your credit card provider, but it’s usually recommended that you take your complaint to the retailer or trader first and give them the opportunity to rectify the problem before using section 75.
  • If you aren’t satisfied with their response, or if the retailer or trader has gone bust, you can take your complaint to the credit card company. Provide all the relevant information about the purchase, including the cost, the details of your complaint and hard copies of receipts or invoices. You should also let them know if you have made a complaint to the retailer and what their response was.
  • Be explicit in stating what you want your letter to achieve and include reference to your consumer rights. For example “I’m making a claim under Section 75 of the Consumer Credit Act”.
  • Make sure you keep a record of any letters (or emails) that you send.
  • Alternatively, you may be able to raise a section 75 claim online using your credit card provider’s website or app.

What to do if your claim is rejected

As long as you follow the steps outlined above and your claim is within the criteria set out, in theory it shouldn’t be too difficult to get a section 75 claim approved. 

But sometimes claims are rejected. If this happens to you and you don’t agree with the reasons why, you can escalate the dispute.

The first step is make a complaint to your provider. It will have eight weeks to deal with the matter. 

If your credit provider still refuses to pay, you can refer your dispute to the Financial Ombudsman Service (FOS). If you don’t have your provider’s permission to do this, you’ll need a “letter of deadlock” to outline the situation between yourself and your provider. 

You’ll need to request this letter from them. If your provider doesn’t send the letter within eight weeks, you can go to the FOS using your own request letter as evidence instead.

Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.