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Section 75 refunds Free protection for ALL spending

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Section 75 super heroYour secret financial self-defence superhero: Section 75 laws 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 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 the credit provider.

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 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…

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).

Section 75 applies to most, but not all, credit card agreements. Credit cards are the main area covered, but the law also applies to store cards, store instalment credit and some car finance agreements (though not hire purchase).

Plus, even if the problem is just non-delivery or faulty goods, you have exactly the same rights from the credit provider as from the retailer, flight company or supplier.

When should you use section 75?

Some typical examples…

  • You order a vase from overseas that never arrives
  • You buy flights direct from an airline that goes bust
  • You buy a radio from a shop, and find it's faulty

In all of these, your lender is jointly liable for a refund.

Therefore if you're buying something or ordering tickets or flights worth more than £100, pay for some or all of it on a credit card to ensure you're protected. Though do keep your receipts as well as your card statement to make it easier.

It's worth remembering that sometimes you might not be able to protect yourself, for example if you pay a monthly fee of less than £100 to a company that goes into administration. But always check to see if you can use other consumer protection, such as chargeback.

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.

Here are a couple of examples to help:

  • Fly to Traveltown with Holidayair on flights costing £99 outbound and £9.99 back, and while it's over £100 in total, as no single ticket was over £100, you're not protected. Yet if Holidayair had only sold return journeys and you bought a specific £109 return ticket, then you'd be covered.
  • Alternatively, if a suit jacket and trousers are individually priced at £60 each, you're not covered, but if you buy the suit as a whole for one price of £120, you are covered.

This can get more complicated though. If the company links the transaction together, eg, by giving a special offer if two flights are purchased together, then you should be covered.

This hasn't been tested yet

This information is based on conversations with eminent legal brains and Trading Standards. Yet this part of the law hasn't been tested in court so far.

Therefore, if in doubt, it's always worth contacting your credit provider to make a claim. If you consider it to be a ‘single item', make sure that's how you phrase it. Please report your experiences in the single item claims thread to help others.

A trick to help - pay the deposit by credit card and you're covered for everything

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.

Therefore if you want protection…

As long as it costs more than £100, pay for even a fraction on a credit card and you're protected.

Here's a Section 75 deposit-only success story to give you some inspiration...

I ordered and paid £15,991 in full for a new car but before I took delivery, the trader went into liquidation.

Thankfully I had paid the first £100 deposit on my Barclaycard credit card. So I made a Section 75 claim. It took six months, but this week I received a credit to my card of the whole amount, just from having paid the first £100 on my card.

Quick questions:

Are overseas and web purchases protected?

I booked tickets for me and five friends. Are we all protected?

'A concert was cancelled, but I'd paid for trains and a hotel. Can I claim for associated costs?

Which credit card should I pick?

I can't get a credit card. Can I still get Section 75 cover?

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 £100Or where you use a debit card or charge card

Goods/services paid for by a secondary cardholder If the main cardholder doesn't pay, or doesn't benefit from the purchase

Goods/services bought through intermediariesIf you buy through a travel agent, PayPal, group-buying sites, etc

Using the credit card indirectlyIf you use credit card cheques, money transfers or cash withdrawals

Where the credit provider & supplier are the same There's no separate relationship - e.g. catalogue accounts

Hire purchase agreementsCar finance, some electrical goods etc bought using an HP deal

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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.

To make a claim, you need to contact your credit card company (you can still claim on an account that's closed) not Visa, Mastercard, or Amex. So if you've got a HSBC Mastercard, you claim from HSBC, not Mastercard.

Similarly, if you're claiming for a sofa bought with instalment credit, your claim's with the finance company (the one you repay to) not DFS or SCS (though you're free to complain to them too).

Yet the experience can be slightly different depending on the scenario:

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.

Sometimes it will tell you it will try to reclaim the cash from the company in administration. You can simply answer: "Great news, I wish you the best of luck. However you are completely liable for my goods yourself, and I would like the full amount I'm entitled to please, regardless of that claim."

You can make a claim as soon as you know about the administration, even if the product has not been delivered or service has not taken place, under something called 'anticipatory breach' (you know you're going to be out of pocket).

If your credit provider won't help, then contact the Financial Ombudsman to make a complaint. This is completely free and well worth doing, there's a simple claim form on its website and details on how it can help in the Financial Fightback guide.

The Ombudsman can look into complaints where you feel you've not been dealt with fairly and reasonably. This includes where a firm hasn't met good industry practice as well as the regulators' rules and the law of the land.

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'.

If you are claiming from the credit provider, be firm but polite, and request a claim form. Again, on the claim form, state it is a claim under "Section 75 of the Consumer Credit Act".

If you’re having problems – claiming from a credit card gives a big boost

If you’re struggling to get a retailer to listen to the fact you have consumer rights, then in some circumstances, assuming you’re eligible, claiming from the credit card company under Section 75 can prove easier. There are a number of reasons for this:

  • 1) Credit card companies have deeper pockets. If you’re claiming something substantial from a small firm, it may fight tooth and nail and force you to go to court to get redress, as it can’t afford to pay out so will make it difficult for you to get your money back. Yet credit card companies are huge beasts, and have deeper pockets so this is less of an issue.
  • 2) If the credit card firm turns you down, you can go to the Ombudsman, not court. This is an important difference. First the Financial Ombudsman Service is free, while even in the small claims court you pay a fee, which is only returned if you win.

    More importantly, the court only looks at the law, while the Ombudsman looks at:

    a) The law
    b) Standard industry practice
    c) Whether you’ve been treated fairly

    The last one especially gives you extra hope if your case falls foul of the letter of the law, but your treatment hasn’t been right.

This ‘Ombudsman’ theory was one Martin first developed during the PIP breast implant scandal (yes that’s PIP, not PPI) which then had a lot of success with people getting money back from credit card providers as the clinics were playing hardball. See Martin’s original PIP hope? blog.

Template letter

You could find the call centre person hasn't a clue what you're talking about, so be polite but firm in the fact that you have a legal right to make a claim. If you're told you to put your request in writing, here's a template letter to help:

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.

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New protection for £30k+ purchases

Section 75 covers purchases made on credit between £100 and £30,000. So a £40,000 car wouldn't be covered under that. However, changes made in 2010 mean that certain credit agreements above £30,000 are now covered.

This protection comes under Section 75a and introduces an upper limit for claims of £60,260. The legislation gets complex for Section 75a, because for a purchase to be covered, the finance must be properly linked to an item (known as a debtor-creditor-supplier agreement) so the finance company can see a clear relationship between the money and the goods.

So, a £40,000 car wouldn't be covered if you'd used a credit card or personal loan as you could have used those to buy anything. A loan, specifically for the car, arranged through the dealership would be covered.

The other big difference is that under Section 75 you can take your complaint to the good/service provider OR to the credit provider, as they're both jointly and severally liable. But, under Section 75a, you need to have unsuccessfully complained or tried to complain to the provider of the good or service (if they still exist) to then make a claim to the credit provider.

Credit for land purchase or business borrowing is not covered under either Section 75 or 75a.

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