Section 75 refunds and Consumer Credit Act shake-up to be explored – here's what's happening
Your right to a refund when credit card purchases go wrong could be shaken-up under plans put forward to potentially overhaul the Consumer Credit Act, which encapsulates Section 75 protections. However, there's no change for now and any amendments could take years to come into force.
Section 75 of the Consumer Credit Act is currently enshrined in law
Section 75 is an important UK consumer protection law, which comes under the Consumer Credit Act 1974 (CCA).
It applies to items costing over £100 and less than £30,000 paid for on credit card and can typically be used when an item you've purchased hasn't arrived or it's broken or faulty. The protection applies to the whole cost of an item or service, even if you only pay for part of it on credit card.
Under the protections, your credit provider must take the same responsibility as the retailer or service provider if things go wrong. In this scenario, your credit card provider can issue you with a full refund even if you've not first asked the retailer or service provider for one.
Note that Section 75 is different to similar Chargeback rules for credit card purchases under £100 and for debit card purchases. That's because Chargeback is an agreement set-up by Amex, Mastercard and Visa rather than a legal requirement. See our Section 75 and Chargeback guides for more information on how these work and how to make a claim.
But plans to overhaul the Consumer Credit Act are being consulted on
In June 2022, the Government first announced its intention to reform the regulatory regime around the CCA, with the ambition of moving most of the Act from law into rules regulated by the Financial Conduct Authority (FCA). A consultation exploring this was launched in December 2022 with the aims of:
- Properly protecting vulnerable consumers.
- Ensuring any changes support other new and existing regulations, such as the new Consumer Duty.
- Ensuring the new rules protect people using new forms of credit, such as Buy Now, Pay Later.
- Allowing enough time for any changes to take affect and to be properly implemented.
- Making sure the rules are simple and that consumers more easily understand what protections they have.
The Government has not yet finalised these proposals though and we won't know the definitive outcome until at least 2024.
Many believe Section 75 could be modernised
As part of the work detailed above, the Government this week (on 11 July) published its formal response to the consultation. In summary, the Government said respondents:
- Generally recognised Section 75 as an important provision by industry and consumers, with some noting that it provides consumers with greater confidence to make purchases on credit.
- Many suggested Section 75 could be modernised. Some noted that there was a lack of clarity over how Section 75 protection works, for example when a third-party, such as Paypal, breaks the link between the credit provider and the retailer or supplier. This means some people may pay using a credit card thinking they have this protection when they do not.
Some respondents also believed that credit card firms should only be liable for the amount of credit provided, rather than the total cost of the item or service. And/or that consumers should only be able to claim Section 75 refunds where they have first been unable to do so from the retailer or supplier.
- Though it was widely agreed that Section 75 should remain in law. The Government has previously said that it’s likely Section 75 could remain in law in some way if the protection can't be replicated under an expanded version the FCA’s powers.
Any eventual change is likely to be a lengthy process though, with a second consultation first due to be published in 2024.
MSE will continue to push to ensure consumer protection isn't weakened
In our response to the initial consultation, MoneySavingExpert.com said that any changes to the CCA should not remove or weaken Section 75 protection for consumers – this includes ensuring you can get a full refund even if you only put part of the purchase on your credit card. We'll continue to campaign on this.
We also pushed for any shake-up to address the current third-party payment-processing loophole, which voids Section 75 protection if you buy from a retailer that uses a third-party processing firm – for example, a ticket from a travel agent or something purchased through Amazon Marketplace.
In addition, MSE warned that the removal of the CCA could put consumers at risk by removing the ability to impose sanctions on firms behaving badly – something the CCA is currently able to do automatically.