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Section 75 Refunds
Free protection for credit card spending on items over £100
Updated 23 December 2020
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. This little-known scheme's taken on much more importance this year as the coronavirus crisis has led to a spate of travel cancellations, with many people asking if Section 75 could help. This guide takes you through your 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.
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What is Section 75?
It's 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. In a nutshell...
Pay for something costing more than £100 and up to £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.
If you've yet to own a credit card or simply don't know how they work, see our Credit Cards Explained guide.
If there's a third-party payment processor, Section 75 may NOT apply
Some shoppers are finding credit card firms are rejecting Section 75 claims because the retailer they bought from used a third-party payment-processing firm to collect their payment – and there's widespread confusion about how these rules apply.
Read MSE's investigation into the payment processing loophole for full details, plus what you can do if affected.
Warning! Don't use PayPal to pay on a credit card. It's one of the third-party payment firms affected and using it will often – though not always – scupper your Section 75 rights. For more info, read our PayPal warning guide.
What does Section 75 cover?
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.
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.
Just to be clear, the item must be more than £100 (ie £100.01+), so something costing exactly £100 would not be covered.
It's still unclear if the bill or the item needs to be over £100
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
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.
Quick questions and points
What is NOT covered by Section 75?
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...
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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.
One important area is when you've paid 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.
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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 say these SHOULD be covered, but you may have to fight.
You could be covered paying through PayPal – but only with some sellers
For this, you need to look at whether the company you're buying from has a 'commercial entity agreement' with PayPal. If it does, and you paid by credit card, you may still be able to make a Section 75 claim. It's worth checking it out, but PayPal's buyer protection is likely to be simpler and faster. Leave Section 75 as a last resort if you can't get any joy from the seller or PayPal.
However, we asked the ombudsman and it said although PayPal will appear on the cardholder's statement, it cannot be seen as the supplier in a debtor-creditor-supplier agreement under Section 75. That's because it acts as the payment intermediary by transferring the money from the buyer's account to the seller's account. This means it breaks the chain that's considered under Section 75.
The ombudsman said there could be instances where the necessary relationship may exist, but it depends on what PayPal's doing. For more information, see Martin's Warning! Don't use PayPal to pay on a credit card guide.
Booking through a travel agent
Another important area 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 full financial protection for package holidays anyway (see Cheap Package Holidays) and many DIY package holidays also fall under this protection – see more in our Holiday Rights guide.
Flights alone don't usually have protection elsewhere, but if you're not covered – because, as above, 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 new area for third-party purchases is group-buying websites, such as Groupon and LivingSocial. Here you buy a voucher for a cheap deal and the goods or services are 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 Morrisons) 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.
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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.
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Items costing exactly £100 or less on a credit card aren't covered by Section 75... but there's a way around it
Section 75 only kicks in for credit purchases of more than £100. 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.
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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 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.
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).
Yet the experience can be slightly different depending on whether the retailer or supplier has or hasn't gone bust.
This is because you might not need to involve your credit card provider if you can still complain directly to the retailer.
If the retailer isn't playing ball, try going to your card provider
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:
Template letter: Section 75 refund (problem opening the letter?)
Protection for £30k+ purchases
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.
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