Section 75 refunds
Free protection for credit card spending on items over £100
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 these days with coronavirus leading to a spate of travel cancellations – it's vital to know where you stand. This guide takes you through your legal rights.
Affected by coronavirus holiday cancellations? Why there might be a better option to try before using Section 75
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.
What is Section 75?
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. Yet it doesn't work on all purchases – just those costing a certain amount:
Pay for something on a credit card over £100 and up to £30,000 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.
The law behind Section 75
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:
- (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.
Section 75 does work – hear from people who have tried it...
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.
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. 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:
- You order expensive jewellery 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.
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.
- You must have direct links with the creditor and supplier to be able to use Section 75. Technically there must be a direct link between the debtor (that's you, the customer), the creditor (the credit card company – for example, American Express, Lloyds, Barclaycard) and the supplier (the retailer selling you the goods or service).
If that relationship is deemed to be broken by the involvement of an intermediary or third party, Section 75 protection WON'T apply. Unfortunately though, even the Financial Ombudsman Service – which arbitrates Section 75 disputes – is unable to provide clear guidance on when this happens, leaving shoppers in the dark.
- If your problem is with faulty goods, first check the warranty instead of using Section 75. If you paid for a product using your card and discover a problem with it while it is still under warranty, and the warranty is with the manufacturer, you may not be able to bring a Section 75 claim for breach of contract.
This is because the contract at the point of sale is with the retailer or supplier and therefore the creditor-debtor-supplier link would be broken. However, you would be able to make a claim if the warranty is with the retailer or supplier directly as the chain would still be intact.
- The law states the item must be more than £100 to be covered by Section 75, but this is not always clear cut. This is where it gets quite tricky. The law is plain; the £100 threshold is for the cash value of a 'single item' (so excluding any fees, and charges such as delivery). Yet single items aren't always straightforward.
- 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.
- If a camera cost exactly £100 and its lens case was £45, neither item is more than £100, so neither is covered.
This can get more complicated though. If the company links the transaction, such as by giving a special offer if you buy two flights together, then you should be covered.
A trick to help – pay the deposit by credit card and you're covered for the whole cost of an item or service
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.
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...
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 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.
Goods/services bought via intermediaries including travel agents, group-buying sites, PayPal and others
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.
- Section 75 claims could be rejected if you've paid by Worldpay or Amazon Marketplace. One important area is when you've paid via an online processor such as Worldpay. 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 say these SHOULD be covered, but you may have to fight.
- You MAY be covered paying through PayPal but it depends on the seller and how you paid. With some sellers you might be covered by Section 75. 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.
How you paid also matters – did you top up using a PayPal balance or simply pay via your linked card? Paying a retailer by credit card via PayPal, where the payment instrument is the credit card, Section 75 protection might also apply, although the Financial Ombudsman says it would depend on the individual circumstances of the transaction.
However, if you make a payment to top up your PayPal account using a credit card and you pay from that PayPal account then section 75 will definitely not extend to whatever you purchased using your PayPal payment account – PayPal has developed their own set of protections but they are not the same protections
We pressed the ombudsman and it said that if your provider rejects your Section 75 claim, and you've paid by PayPal it will look at the individual circumstances in your case.
Goods/services paid for through a 'buy now, pay later' service such as Klarna & others
If you use a buy now, pay later service (BNPL) – such as Klarna, Clearpay or Laybuy – to buy something, you'll break the 'direct link' that's required for Section 75 protection. So it's unlikely you'll be able to call on your credit card provider to pursue a Section 75 refund if the item turns up faulty.
This is also the case if you use a BNPL service's 'pay now' option, such as Klarna's. This is because the 'direct link' is still broken. Read more about this in our 'Beware using Klarna's new 'pay now' service MSE News story.
Goods/services paid for indirectly via a credit card
Pay with a money transfer or withdraw cash on a credit card and, according to the Financial Ombudsman, Section 75 doesn't apply as it's an indirect form of payment.
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.
If the credit provider and the supplier are the SAME – for example, catalogue accounts
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 agreements – car finance, some electrical goods etc.
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.
Items costing exactly £100 or less on a credit card ... but there's a way around it
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.
- The company has gone into administration.
- Quality of item – the goods were not as described or were defective.
- Non-delivery – the goods were not received as promised.
- Technical issue – such as a processing error by the bank.
- Clerical error – being charged multiple times or being billed for the incorrect amount.
- Fraud – you have been the victim of fraud and did not authorise the purchase.
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.
How do I make a Section 75 claim?
It's generally easiest to try and settle any dispute with the retailer first. See if it's willing to offer a refund, replacement or repair (if this is possible).
Yet, the law makes clear that both the retailer and the credit card company are jointly responsible, so you don't have to go to the retailer first if it's difficult to do so.
If you are making a Section 75 claim, how you do it differs by card provider. Some will let you dispute a payment through your mobile banking app, or using their online chat services, while others will prefer that you call up, or fill in a claim form first. Check with your individual card provider to find out which is the best way to make a claim.
Make sure you're claiming from the card provider – so, for example, if you have an HSBC Mastercard, you'll need to contact HSBC about the Section 75 claim, not Mastercard.
Sadly, it's not always straightforward to make a claim...
- Sometimes the credit card company will ask you to get independent verification of a fault. If it asks for this, and approves the claim, it should also reimburse you for costs of getting the expert opinion. Most claims go ahead without this, but it's a possibility your lender will ask.
- 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."
Luckily, if you do need to make a claim, and can't do it through your online banking or app, we've a tool to help...
Our free online tool helps draft a letter (which you can alter before sending), sends it, tells you when you've a response, keeps track of your complaint, and escalates it if necessary.
We do this using the complaints firm Resolver. We're working with Resolver on many projects to combine our expertise on how to complain with its cutting-edge technology.
How it works:
- Pick your card provider from the list. If you can’t find your provider listed there, Resolver says accounts can be added to the tool if you alert it via its website.
- Select your issue. Once you've chosen your card provider, you'll be presented with some drop down lists. Select the option that fits most closely with your complaint.
- Start your case. You’ll then be taken to a page with information about how Resolver can help with your claim, along with your rights, and the things you should bear in mind about using the service. If you’re happy with all this information, click the ‘Start your case now’ button.
- Provide further information about your claim, and some personal details. If you would like to, you'll be able to upload any evidence you’d like to use to strengthen your case. These can be attached to your claim letter. You could include things like photographs, email correspondence, and bank statements.
- Send your claim. Your claim letter will then be drafted for you. In many cases once you’ve checked it over and made any changes you want, you can send it through the Resolver platform.
Note: Resolver isn’t a complaints management firm. There’s no charge to use the service, and you’re in charge of complaint and progressing it – they’ll support you through the process, and help you escalate your claim at the right time too.
If you’d rather just send the letter yourself, we’ve also made a template that you can use as a general guide. Click the link below to download and edit:
If the card company turns you down, escalate your complaint to the Financial Ombudsman
If your credit provider won't help, has taken longer than eight weeks to deal with your complaint, or you're not satisfied with their response, escalate it to the Financial Ombudsman.
This is completely free and well worth doing. 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. This route is less formal than a court hearing, but the Ombudsman can still order firms to pay you compensation if it agrees with your case.
If you use the Resolver service above to help with your claim, it will notify you when it's the right time to escalate your complaint to the Financial Ombudsman, and help you do that.
If in doubt it's always worth making a claim
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.
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.
Items more than £30,000 are covered under Section 75a – but it's a bit more complicated
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.
Section 75 FAQs
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 – in other words, that 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.
Section 75 can also be used if you've bought technical services or computer software online.
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.
We asked this question to a range of card issuers and banks and all of them told us they'd look in to credit card transactions made through Apple or Google Pay the same way as they would if you'd used the card to pay directly.
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