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27 September 2021
Section 75 refunds
Your secret financial superhero: Section 75 laws mean your credit card provider must protect purchases over £100 for free, meaning you could get your money back if there's a problem. It's taken on more importance as the coronavirus crisis has led to a spate of travel cancellations and now with holidays back on the cards, it's vital to know where you stand. This guide takes you through your legal rights.
Coronavirus has meant many people have faced holiday cancellations and battles to get their money back. If you qualify for a chargeback AND Section 75 claim, but are unsure which to try first, consider this from MSE founder Martin Lewis:
"Even if you actually have a credit card and qualify for Section 75, I wouldn't ask for that at this stage. I would ask for a chargeback. That's because under the chargeback process, which is part of the Visa, Mastercard and Amex rules, your bank is asking for money back from the holiday firm's bank, which your bank is unlikely to have an issue doing."
For more on your holiday refund rights, see our Coronavirus Travel Rights guide.
Section 75 is an important UK consumer protection law made in the 1970s that means your credit provider must take the same responsibility as the retailer if things go wrong with a purchase.
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.
If you've yet to own a credit card or simply don't know how they work, see our Credit Cards Explained guide.
Pay for something on a credit card £100+ and up to £30,000 and the provider's equally liable if something goes wrong.
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.
(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:
(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:
(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:
(6) This section does not apply where:
(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.
One MoneySaver paid the deposit for their car by credit card, and got a full refund using Section 75 when the trader went bust.
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.
And here's a success story that ended up with the ombudsman and proves persistence pays off.
MoneySaver Linda and her husband had bought a £22,400 kitchen, and following this guide paid £200 as a deposit on a credit card for extra protection. The firm went bust so they asked the card firm for all the cash back – as they were due – but it said no.
Linda went to the Financial Ombudsman. It ordered the card provider to pay out the full whack, plus 8% statutory interest, plus £200 extra for "inconvenience caused". For inspiration see Linda's full "I got £23k back" story.
Martin's always said to keep going with a claim. Tesco tried to say the name of the business owner was different to his real name so it wasn't the same person. But I kept going back on MoneySavingExpert and reading about Section 75 and I kept thinking, 'don't give up, keep going, keep fighting' as I knew we were right.
But when we heard the adjudicator had found in our favour, I burst into tears. I just couldn't believe it. Although at times we felt like giving up, I was so convinced we were right having re-read the information on this site and even quoting a case you had on here, that I kept going.
The ombudsman says the legislation doesn't specify a minimum deposit size – so in theory a consumer could pay as little as a penny. But some retailers may set a minimum amount that you have to pay by card, it says, and this will vary depending on the store.
Section 75 is fantastic protection – if you order something and 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 (but 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. If your goods are faulty, first check the warranty, as if it's with the manufacturer rather than the retailer, you might not be able to use Section 75, see below.
Here are some examples for when you can use it:
In all of these, your lender is jointly liable for a refund.
So 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. Keep your receipts and card statement to make it easier.
If you discover a problem with a product you bought using a credit card (and it meets the requirements in terms of minimum amount, debtor/creditor supply link etc) then, even if the account is closed, the provider would still be liable and would need to refund you.
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 – even just 1p would count – 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.
As always with these things, a few exceptions escape the safety net. The first is anything to do with the purchase of land – this is controlled by regulation from the Financial Conduct Authority. But there are other exceptions, including...
If you have an additional card for a partner, child or friend and this card is used to pay for something you later need to claim for, you'll need to show the item/service provides some benefit to the primary cardholder to be covered.
So a family car or gift for the main cardholder would likely 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.
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.
Pay with a money transfer or a credit card cheque (no longer widely used) 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), the protection doesn't apply for products or services 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 over £100 AND buy the voucher directly from the goods/service supplier, not from a third-party supplier.
Section 75 relies on a three-party relationship between the consumer, the lender and the supplier. So if the supplier offers its own credit facility, the supplier and the lender are the same. This means you aren't covered under Section 75.
Thankfully, this situation's rare. You'd see it if, for example, you'd bought from the Next catalogue using its catalogue credit. In this case the supplier and the lender are the same, so 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. This way you can be sure that there will still be a three-party relationship – supplier, lender and consumer – and therefore Section 75 cover.
Hire purchase (HP) 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.
Section 75 only kicks in for credit purchases of more than £100 (so £100.01). It doesn't apply to anything you pay on a credit card costing less than that, 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).
But 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 it agrees you've a legitimate complaint.
As a rule, act quickly with chargeback as there's a claim deadline. The rules set by Visa, Mastercard and American Express usually only give you 120 days to claim – and the clock normally starts ticking when you first notice a problem, but it depends on the situation. See our Chargeback guide for full info.
However, it's important to know chargeback is part of Visa, Mastercard and Amex's internal rules and NOT a legal requirement, unlike Section 75.
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.
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) not DFS or SCS (but you can complain to them too).
Remember this is a legal right. Martin's claimed under Section 75 twice. Once it was easy, the other time the provider kicked up a fuss. While credit providers are getting better, many still talk about their own procedures.
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."
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).
It should then send you a claim form – though it might not be quite that simple.
Important: 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 FOS and Financial Rights 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.
The law makes clear that the credit company is jointly responsible along with the retailer, 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".
Again, you may be asked to get an independent report verifying a fault (if that's what you're complaining about). If the claim's approved, you should be reimbursed for the cost of the report too. Most claims go ahead without you needing to get this, but your lender may ask.
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 two key reasons for this:
More importantly, the court only looks at the law, while the ombudsman looks at:
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.
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.
Section 75 covers purchases made on credit over £100 and up to £30,000. So a car costing £40,000 wouldn't be covered. Nor would a camera costing exactly £100 (but it would if it cost £100.01).
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 firm can see a clear relationship between the money and 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 make a claim to the credit provider.
Credit for land purchase or business borrowing isn't covered under either Section 75 or 75a.
No. But there is a way you can access some purchase protection without getting a credit card – by using a prepaid card. Prepaid cards allow you to load them with cash before spending. They don't credit-check, so they're useful for people who can't get a credit card.
For example, Cashplus offers a contactless debit 'account' that behaves like a prepaid credit card, offering purchase protection similar to Section 75 – although this is NOT legal protection.
If you've paid for something on a card but since cancelled it you may still have Section 75 protection.
The Financial Ombudsman Service told us that assuming you meet all other criteria you should be covered, as the fact you've cancelled the card doesn't matter. The original payment method is what's important, ie, you paid on a credit card.
If you have any doubt, put in a claim – the worst that can happen is your claim is rejected.
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, which you can pay off in full each month, it's time to apply for a new card. The two best choices are:
A cashback credit card
These pay you when you spend on them. With a direct debit set up so there's no interest, they can add £100s a year to your income without any hassle. Full info and best buys in our Credit Card Rewards guide.
A 0% spending card
If you're going to spend on a card you can't repay in full, 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 our Best 0% Credit Cards guide.
Yes. This used to be a hot potato but the Court of Appeal has confirmed this rule counts with 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.
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 on your credit card for you and a group of mates to go on holiday, 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 Service (FOS) says there's a chance you'll not be covered for the full amount, possibly only being entitled to your own portion 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 our FOS and Financial Rights guide.
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 back transport and hotel costs following a postponed concert...
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.
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