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Section 75: Free protection for credit card spending

a credit card and padlockConsumers are increasingly relying on a part of the law known as Section 75 to ensure they don’t end up out of pocket.

However, new findings from the Financial Ombudsman Service (FOS) in its annual review show up to a quarter of all complaints about credit card and point-of-sale loans now involve disputes over this rule.

The FOS, which mediates in disputes between consumers and financial services providers, says it is receiving about 100 credit card complaints a week involving Section 75 claims.

There are concerns that shoppers claiming a refund are now routinely being fobbed off by credit card companies – at a time when they need this protection more than ever.

Increased awareness

Section 75 was once a little-known regulation, but over the past few years, consumer awareness has improved.

"In recent years, we have seen a significant increase in the number of complaints involving this rule.

"This suggests consumer awareness of the protection it can offer is growing," says chief Ombudsman Natalie Ceeney.

"However, Section 75 does not provide protection for every transaction made using a credit card, and the rules are complex.

"It’s vital that people know their rights if they use their card and something goes wrong."

When does Section 75 apply?

Section 75 of the Consumer Credit Act 1974 applies when you buy goods or services that cost between £100 and £30,000 and pay for these with a credit card.

"The card provider is jointly liable with the retailer or service provider if the goods or services are faulty or not delivered," says David Black from financial analyst Defaqto.

"This provides an additional layer of legal protection for consumers, and is a real benefit of paying by credit card, rather than by cheque or cash, for certain transactions."

For example, if you paid for airline tickets with a credit card and the airline went bust, you would be covered under Section 75.

"Each claim is assessed on a case-by-case basis,” says Doriena Koldenhof from the UK Cards Association.

"But if goods turn out be faulty or not fit for purpose, or if the company you bought from doesn’t deliver or goes bust, it’s worth making a claim."

Even if you’ve only used your credit card to pay a deposit on goods and services costing between £100 and £30,000, Section 75 protection still applies to the entire purchase.

Overseas purchases

Section 75 now also applies to purchases made overseas.

"There were lengthy court proceedings over this issue and these lasted for about three and a half years," says Black.

"But the protection now also extends to transactions abroad."

If your bank or card provider turns you down, you can make a formal complaint.

If you do not receive a satisfactory response within eight weeks, you can take your case to the Financial Ombudsman Service.

However, note that you cannot claim under Section 75 if you have simply changed your mind about a purchase, or later discover you could buy it more cheaply elsewhere.

What if you pay by debit card?

If you use a debit card to make a payment, or are outside of the Section 75 limits, you might still be covered under a scheme called Chargeback.

Visa, Mastercard and American Express apply this internal rule when consumers make purchases with a debit card.

It also comes into play when using a credit card for purchases under £100, and when using a prepaid card.

"Chargeback might, for example, provide cover if a supplier goes bust before delivery, or if goods that are delivered turn out to be faulty," says Black.

"Crucially, however, unlike Section 75, Chargeback doesn’t provide legal protection because it’s a voluntary arrangement."

The exact rules vary according to the card scheme.

"There is usually a time limit of between four and six months when making a claim," adds Koldenhof.

"It’s worth checking with your card company to see exactly what protection is offered on your plastic."

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Esther Shaw

Esther Shaw

Esther Shaw is a regular contributor to and is the former deputy money editor at The Independent and Independent on Sunday. Before that, she worked as a money and City reporter on The Daily Express and Sunday Express.
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