Section 75 is a little-known law which means your plastic must protect anything you buy over £100 for free, so if there's a problem you can get your money back.
This Q&A guide shows you how to maximise your protection, plus when Section 75 covers you. There's also free template letters for making Section 75 claims.
Your secret financial super-hero: Section 75 laws mean your plastic must protect purchases over £100 for free, so if there's a problem you can get your money back.
This full detailed Q&A guide shows you how to maximise your protection, when Section 75 covers you and when it doesn't and includes free template letters for making Section 75 claims to your credit provider.
In this guide
While every effort's been made to ensure this article's accuracy, it doesn't constitute legal advice tailored to your individual circumstances. If you act on it, you acknowledge that you do so at your own risk. We can't assume responsibility and don't accept liability for any damage or loss which may arise as a result of your reliance upon it.
What is Section 75?
It's a vital law made in the UK in the 1970s that means your credit provider must take the same responsibility a retailer does if things go wrong with a purchase. In a nutshell...
Pay for something costing between £100 and £30,000 on credit and the provider's equally liable if something goes wrong.
This isn't the credit provider being nice. It's a legal protection put in place so that you're never in the position of paying off debt for something you didn't receive or wasn't as it should've been. Whether it's a flight, kitchen, computer or anything else, pay on a credit card, store card or with store instalment credit and the credit provider's responsible too.
The law behind this
This all comes from Section 75 of the Consumer Credit Act 1974, hence why this is sexily named Section 75. It rather impenetrably says…
75. — (1) If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor.
Read it in full
(2) Subject to any agreement between them, the creditor shall be entitled to be indemnified by the supplier for loss suffered by the creditor in satisfying his liability under sub-section (1), including costs reasonably incurred by him in defending proceedings instituted by the debtor.
(3) Sub-section (1) does not apply to a claim:
(a) under a non-commercial agreement,
(b) so far as the claim relates to a single item to which the supplier has attached a cash price not exceeding £100 or more than £30,000, or
(c) under a debtor-creditor-supplier agreement for running-account credit:
(i) which provides for the making of payments by the debtor in relation to specified periods which, in the case of an agreement which is not secured on land, do not exceed three months, and
(ii) which requires that the number of payments to be made by the debtor in repayments of the whole amount of the credit provided in each such period shall not exceed one.
(4) This section applies notwithstanding that the debtor, in entering into the transaction, exceeded the credit limit or otherwise contravened any term of the agreement.
(5) In an action brought against the creditor under sub-section (1) he shall be entitled, in accordance with rules of court, to have the supplier made a party in the proceedings.
75A - (1) If the debtor under a linked credit agreement has a claim against the supplier in respect of a breach of contract the debtor may pursue that claim against the creditor where any of the conditions in subsection (2) are met.
(2) The conditions in subsection (1) are:
(a) that the supplier cannot be traced,
(b) that the debtor has contacted the supplier but the supplier has not responded,
(c) that the supplier is insolvent, or
(d) that the debtor has taken reasonable steps to pursue his claim against the supplier but has not obtained satisfaction for his claim.
(3) The steps referred to in subsection (2)(d) need not include litigation.
(4) For the purposes of subsection (2)(d) a debtor is to be deemed to have obtained satisfaction where he has accepted a replacement product or service or other compensation from the supplier in settlement of his claim.
(5) In this section “linked credit agreement” means a regulated consumer credit agreement which serves exclusively to finance an agreement for the supply of specific goods or the provision of a specific service and where:
(a) the creditor uses the services of the supplier in connection with the preparation or making of the credit agreement, or
(b) the specific goods or provision of a specific service are explicitly specified in the credit agreement.
(6) This section does not apply where:
(a) the cash value of the goods or service is £30, 000 or less,
(b) the linked credit agreement is for credit which exceeds £60, 260, or
(c) the linked credit agreement is entered into by the debtor wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him.
(7) Subsections (2) to (5) of section 16B (declaration by the debtor as to the purposes of the agreement) apply for the purposes of subsection (6)(c).
(8) This section does not apply to an agreement secured on land.
What does Section 75 cover?
Section 75 is fantastic protection. It means if you order something and if the retailer goes kaput, you can still claim your money back from the credit card provider (even if you've since closed your credit card account).
Should the bill or the item cost over £100?
This is where it gets quite tricky. The law is plain; the £100 is for the cash value of a 'single item' (so excluding any fees, and charges such as delivery). Yet single items aren't always that straightforward.
A trick to help - pay the deposit by credit card and you're covered
The law's specific on this, you get the protection for the whole cost of an item or service, even if you only pay for a part of it on credit. The only condition is that what you're buying costs more than £100 and less than £30,000.
Are overseas and web purchases protected?
Yes. This used to be a hot potato, when this got to the Court of Appeal and it confirmed this applies to everything you buy. Whether it’s in the UK, abroad or on a foreign website, Section 75 applies.
This is a real boon, as often if you buy something using a credit card abroad it’s much more difficult to get in touch with the retailer. So don’t bother, simply make a claim directly against the card company.
I booked tickets for me and five friends. Are we all protected?
There's conflicting information on this, but in general, if you've paid for a group booking, such as tickets or a holiday for friends or non-immediate family, you should be protected for the full payment. Yet for those who want to play it safe, the best bet is to ask others to pay their own way where possible.
Let's say you pay for a whole group of mates to go on holiday with your credit card, and they pay you back their portion. Section 75 protection becomes confused if the holiday firm goes into administration, as there is some argument over who is part of the credit card contract.
Trading Standards was positive, telling us the payee "is entitled to a compensation of the full amount from the credit card company".
But the Financial Ombudsman says there's a chance you'll not be covered for the full amount, possibly only being entitled to your own proportion of the payment. So while payments for partners and children are easier, others are not so clear-cut.
If this happens to you and your bank won't reimburse the full cost, take your complaint to the Ombudsman anyway as it could agree to your complaint. Details on how the FOS can help are in the Financial Fightback guide.
A concert was cancelled, but I'd paid for trains/hotel. Can I claim for associated costs?
The law allows you to claim for ‘consequential losses' arising from the problem. In other words, if what went wrong forced you to shell out, the credit company is liable just like the retailer would be. Obviously it's more difficult to do, but it's still legal.
One person managed to claim transport & hotel costs to a postponed concert back...
Last year I purchased concert tickets for myself and a friend. The concert was postponed but while the tickets were still valid, I'd also spent £230 on train tickets and hotel accommodation.
I contacted the rail companies and the hotel to ask for a refund, only to be told they were non-refundable. So I contacted my credit card company quoting the Consumer Credit Act and asked for a refund.
This morning, to my surprise, I received a letter from my credit card company offering me a full refund of £230.
Which credit card should I pick?
Just to clear this up, when you're choosing a card, this protection only applies to credit and store cards, NOT debit cards, cash spending, cheques or charge cards. Therefore you must use a credit card to be protected.
Yet credit card companies do, of course, make their money by charging you interest. And frankly the interest cost is so large it often overrides the protection, so follow…
The Golden Rule
Always set up a direct debit to pay the card off in full each month, so you'll never pay interest.
If you don't have a credit card or have debts on a card, and need another specially for these purchases so you can pay that one off in full each month, then it's time to apply for a new card. In which case, the two best choices are:
A cashback credit card
These pay you each and every time you spend on them. With a direct debit set up so there's no interest, this can add £100s a year to your income without any hassle. Full info and best buys in the Cashback Credit Cards guide.
A 0% for spending card.
If you are going to spend on a card you can't repay in full, at least ensure it's as cheap as possible. A number of cards offer 0% interest for more than a year on all your spending. Full info and best buys in the 0% Interest Cards guide.
I can't get a credit card. Can I still get Section 75 cover?
There is one loophole you can use to get cover without getting a credit card.
Prepaid cards allow you to load them up with cash before spending. They don't credit check, so they're useful for people who can't get a credit card.
The CashPlus* prepaid card's provider confirms it provides protection similar to Section 75, although this is NOT legal protection.
The Activeplus account. Here you pay £4.95 a month for a minimum of a year (so £60 a year) and you get a facility that helps towards rebuilding your credit rating. There are then no fees for spending on it, but there's a further monthly fee if you do not use or top up the card for four months.
The Flexiplus account. Here there's no monthly fee, provided you use or top up the card every four months. There's a 99p transaction fee each time you spend. If you're getting the card for a few big transactions, this is cheapest.
Is it worth it?
If the protection ended up paying out, the cost of the card is cheap, otherwise it may feel like a waste of money. If you're making a big purchase with a company that worries you, this may give added piece of mind.
It is worth noting you are reliant on the fact that the card company itself won't go bust to get your money (and for the safety of the cash you load).
Prepaid cards are growing in popularity, so it is likely to have some financial strength, and it'd be quite a coincidence for the card company and retailer to go bankrupt at the same time - but nothing is 100%.
What's not covered by Section 75?
As always with these things, a few exceptions escape the safety net. First is anything to do with the purchase of land - this is controlled by regulation from the Financial Conduct Authority. But there's other purchases that escape the safety net too...
Items costing less than £100 or where you use a debit card or charge card
Section 75 only applies to credit purchases over £100. So it doesn't apply to anything you paid on a credit card costing £99.99 or less, and nor does it apply to anything - bought at any price - on a debit card or charge card (as these aren't considered credit purchases).
Where Section 75 doesn't apply, there's another rule that you may be able to fall back on. It's called chargeback, and it allows the card provider to reverse a payment you've made to a retailer if they agree you've a legitimate complaint.
Although with chargeback, remember that it's not legal protection, it's the Visa/Mastercard/Amex process and that's nowhere near as weighty as Section 75. See the full Chargeback guide.
Goods/services paid for by a secondary cardholder
If you have an additional card for a partner, child or friend and this card is used to make a payment for a item you subsequently need to claim for, you'll need to show the item/service provides some benefit to the primary cardholder to be covered.
So if it was a family car or gift for the main cardholder, this is likely to be OK. But a solo flight for the additional cardholder wouldn't be.
This isn't technically written into the legislation, but is based on a ruling (62/02) by the Financial Ombudsman in 2007.
Goods/services bought through intermediaries - travel agent, group-buying sites etc
You're unlikely to be covered when payments are made to a company that isn't the one providing you with the product or service. In these cases, the credit card company usually says it didn't have a direct relationship with the supplier, so isn't equally liable.
If you stand your ground, it's possible to argue that the indirect relationship constitutes an arrangement to pay. The Court of Appeal decided this was acceptable in 2006, but it's unlikely to be an easy task.
The first main area is paying via an online processor such as PayPal, WorldPay or Google Wallet. Though these can have their own refund systems, they aren't as strong as the legal protection of Section 75.
There have also been recent cases where people buying goods on Amazon through 'Marketplace' suppliers have been turned down for Section 75 claims by credit card companies. Some opinion says these SHOULD be covered, but it may be a fight to make it happen.
The other scenario is buying through a travel agent, where it is simply directing you to get a flight from an airline or a package holiday from a tour operator.
You should have ATOL protection for package holidays anyway (see Cheap Package Holidays) and in 2012 this protection was extended to include flights, accommodation or car hire booked from the same company within a day of each other, even if they're not a formal package.
Flights alone don't usually have protection elsewhere but if you're not covered, as many travel companies act as an agent of the tour operator, a claim against your card provider could be successful, so give it a try.
A relatively new area for third party purchases is group buying websites, sucvh as Groupon and LivingSocial. Here you buy a voucher for a cheap deal and the goods or service is redeemed by another retailer. This indirect relationship could make it hard to claim using Section 75, yet you should be able to use the chargeback route instead.
A standard voucher purchased from another store (eg, a Topshop voucher bought from Morrison's) would also count as an indirect purchase, so is unlikely to be covered in the event that you couldn't use the voucher at Topshop.
Using the credit card indirectly
Pay with a money transfer or a credit card cheque and, according to the Financial Ombudsman, Section 75 doesn't apply as it's an indirect form of payment.
It's also worth pointing out that if you withdraw cash on the card (usually something to avoid due to interest charges, even if you repay in full), then the protection doesn't apply for things you buy with the cash.
One other point to make is the purchase of gift vouchers on a credit card may be counted as a cash payment, so you may be charged interest from the purchase date until the date you pay it off. Check your card's terms and pay off the card sooner if this applies to you.
Vouchers are covered by Section 75, assuming you use a credit/store card, spend more than £100 AND buy the voucher directly from the supplier of the good/service, not from a third party supplier.
Where the credit provider & supplier are the same - eg, catalogue accounts
Section 75 relies on there being a three-party relationship between the consumer, the lender and the supplier. So if the supplier and the lender are the same, you can't use Section 75.
Thankfully, this situation's quite rare, and would only be of concern for non-credit card lending. For example, if you'd bought from the Next catalogue using its catalogue credit, you wouldn't have a Section 75 claim.
Most car finance is not provided by the dealership, but it's always worth checking, especially on large purchases that you've arranged credit for, whether Section 75 would apply if you ended up needing it. If in doubt, use a credit card (as banks don't supply goods).
Hire purchase agreements - car finance, some electrical goods etc
Hire purchase is not covered under Section 75, though the redress process is similar. If you have a complaint about something you bought using HP, try to resolve it with the supplier. It has obligations under the Supply of Goods (Implied Terms) Act to ensure that the goods are of satisfactory quality, and as described.
If you can't resolve the complaint with the supplier, try the finance provider (the company you're making repayments to). It's also bound under the same Act to make things right with you, though what that actually means will depend on your complaint. If you're still not satisfied, you can take your complaint to the Financial Ombudsman.
Important! Check that you actually have a hire purchase agreement. Although it's still common for car finance, most stores selling electricals now offer in-store instalment credit (which is covered by Section 75) rather than hire purchase.
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How do I make a Section 75 claim?
Firstly, remember this is a legal right. Martin's claimed under Section 75 a couple of times, once it was easy, the other time the provider kicked up a fuss. While credit providers are getting better, many will still talk about their own procedures.
If the retailer/supplier has gone bust
Here it's clear-cut, you can't go to anyone else so the only option is to claim from the credit company. Simply call your credit provider and tell it what you're doing. Actually say: "I am making a claim under Section 75 of the Consumer Credit Act". It should then send you a claim form.
Complaints about a product and the retailer/supplier isn't bust
Here you may be met by "that's not our business, go to the retailer". Actually you don't have to, it is its business and you've a legal right to redress. The law makes clear that the credit company is jointly responsible, so there's no 'first point of call'.
Of course, if the credit provider went bust, then while you could become a creditor, there is no protection from this. Yet for both the retailer and creditor at the same time to go bust, you'd have been very unlucky.
New protection for £30k+ purchases
Section 75 covers purchases made on credit between £100 and £30,000. So a car costing £40,000 wouldn't be covered. However, changes made in 2010 mean that certain credit agreements above £30,000 are now covered.
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