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Section 75 refunds

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Wendy and Martin

Updated July 2018

Section 75 super hero

Your secret financial super-hero: Section 75 laws mean your credit card must protect purchases over £100 for free, so if there's a problem you could 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 your 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 UK 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.

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 it

This all comes from Section 75 of the Consumer Credit Act 1974, hence why this is sexily named Section 75. It rather impenetrably says…

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.

Read it in full

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.

Technically there must be a direct link between the debtor (that's you, the customer), the creditor (the credit card company – eg, 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.

Read MSE's investigation into the payment processing loophole for full details, plus what you can do if affected.

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.

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. Though 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.

It's still unclear whether 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.

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.

And a success story that ended up with the Ombudsman and proves that persistence pays off...

Linda Marriott 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. When the firm went bust, they asked the card firm for all the cash back from their credit card – as they were due – but it said no.

In the end they went to the Financial Ombudsman. It ordered the card 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 in the 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 amount that the deposit has to be – 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.

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/hotel. Can I claim for associated costs?

What if I need to make a claim but I've cancelled my credit card?

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 are other exceptions too, a major one being...

Items costing less than £100 on credit card or where you use a debit card or charge card aren't covered...but there's a way around it

Section 75 only kicks in for credit purchases of £100 or more. So it doesn't apply to anything you paid on a credit card costing £99.99 or less, 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 they agree you've a legitimate complaint.

Possible reasons for claiming a chargeback are:

  • Company goes into administration – the company you purchased from has gone bust.
  • Quality of item – the goods were not as described or were defective.
  • Non-delivery – the goods were not received as promised.
  • Technical issue – expired authorisation or 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.

As a rule, act quickly with chargeback as there's a claim deadline. The rules set by Visa, chargeback and American Express only usually give you 120 days to get a claim in – and the clock usually starts ticking when you first notice a problem though it will depend on the type of situation.

Here are other purchases that escape the safety net...

Goods/services paid for by a secondary cardholder

Goods/services bought through intermediaries – travel agent, group-buying sites, PayPal etc

Using the credit card indirectly

Where the credit provider & supplier are the same – eg, catalogue accounts

Hire purchase agreements – car finance, some electrical goods etc

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 whether the retailer or supplier has or hasn't gone bust.

This is because you might not need to involve your credit card provider should you still be able to complain directly to the retailer.

If the retailer/supplier has gone bust – go to your credit card provider

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 – though it might not be quite that simple.

Sometimes the credit card company will ask you to get independent verification of a fault. If it asks for this, and then approves the claim, it should also reimburse you for costs incurred in 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."

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 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.

Complaints about a product and the retailer/supplier isn't bust – go to the retailer first

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".

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 it's a possibility your lender will ask.

If the retailer isn't playing ball it may be easier to go 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:

  • 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.
  • 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:

    • The law, or

    • Standard industry practice, or

    • Whether you've been treated fairly and reasonably

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.

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.

Protection for £30k+ purchases

Section 75 covers purchases made on credit between £100 and £30,000. So a car costing £40,000 wouldn't be covered. 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 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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