How chargeback and section 75 protection work for your credit and debit card

 Find out what protection you get when spending on your credit and debit cards under the chargeback scheme and section 75 of the Consumer Credit Act.  This guide will help make a claim if the company you’re buying from goes bust or doesn’t deliver what it’s promised. 

Section 75: credit card payment protection

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If you use your credit card to buy something, including goods or a holiday (even if you only put the deposit on your credit card), costing over £100 and up to £30,000, you’re covered by ‘section 75’ of the Consumer Credit Act.

This means the credit card company has equal responsibility (or ‘liability’) with the seller if there’s a problem with the things you’ve bought or the company you’ve bought them from fails.

What does section 75 cover?

  • If the company has failed to supply the goods or services, or has supplied goods not up to standard, or;
  • If the company has misrepresented what it is supplying. For example, a software supplier says a software package you’re buying will work with a particular computer when it doesn’t.

What spending limits are there to section 75?

To qualify for protection under section 75, you have to spend between £100 and £30,000 on your credit card. This protection does not apply to anything you buy using a debit card.

The £100 minimum amount applies to each item or set of items you buy, rather than the total bill.

For example, if you bought a dress and jacket that weren’t part of a suit, with each one costing less than £100, you wouldn’t qualify for the consumer protection under section 75.

Another example would be buying tickets for an event, or airline tickets.

A ‘family ticket’ would count as one item but individual tickets for family members would not.

You might be able to make a claim against your credit card company under a voluntary scheme called ‘chargeback’ which we explain in the Understanding chargeback section below.

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Section 75 protection if you pay a deposit by credit card

You don’t need to pay the full price by credit card to get section 75 protection. It’s enough to just pay the deposit to get you the legal protection.

For example, if you bought something costing £200 but paid a deposit of £20 on your credit card and the rest by other means (eg via debit card or cash) you’d still be covered and you would be able to claim the whole £200 (and not just the deposit) from your credit card company if the goods didn’t arrive or were faulty.

You can also make a claim for more than just the price of the items. For example, if you could claim from the supplier for additional expenses (such as postage) or consequential losses (such as damage caused by a faulty item), then you can also make a section 75 claim for these with your credit card company.

Second cardholders and section 75

The position is a bit more complicated if the purchase is made by a second cardholder, such as a husband, wife or partner.

Any claim must be made by the main cardholder, as they’re the one who signed the credit agreement, and the credit card company might reject a claim if it wasn’t a joint purchase such as a family holiday or something for the main cardholder (such as a birthday present).

It’s a bit of a grey area so it’s worth checking with the card issuer when you start your claim.

Section 75 and Paypal

If you use Paypal to make credit card purchases you won’t have section 75 protection.

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Paying for holidays on a credit card

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If you’ve booked a holiday or flights costing between £100 and £30,000 and paid either a deposit or the full price on your credit card, you might be able to make a claim if the airline or holiday company goes bust or the holiday isn’t as described. But not all situations are covered.

What is covered:

  • the cost of your flights if the airline goes bust
  • the cost of your holiday if the holiday company goes bust
  • additional expenses or consequential loss — for example, if you had to buy more expensive flights to get home after an airline went bust.

What isn’t covered:

  • in some cases, if you buy a ‘flight only’ from a third party, such as a travel agent, you might not be able to make a claim because the third party was only contracted to provide the tickets and not the flight;
  • any costs that you didn’t have to incur – for example, if you decided to extend your stay after the airline went bust (longer than you needed to) you’d be unlikely to be able to claim for extra costs.

How start a section 75 claim on your credit card

If you pay for something on your credit card and there’s a problem,  firstly contact the company you bought it from, to give them a chance to put things right.

But if they don’t reply, or they won’t give you a refund, or it’s clear there’s no point in contacting them (as they have disappeared or gone into liquidation), you can make a claim against your credit card company.

Here’s how:

  • Write to the credit card company, stating what you bought, where and when you bought it and how much you paid. Include copies of receipts if you have them (if not, you’ll need some other proof of purchase).
  • Tell them that you’ve tried to contact the company you bought the goods or services from and what the response has been – if any.
  • Explain what you’d like the credit card company to do, which will usually be to refund the purchase price into your credit card account – be sure to state: “I am making a claim under Section 75 of the Consumer Credit Act”.
  • Keep a record of the letter or email you’ve sent.
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Or you can fill in some details on the Which? website and it will email you a template letter to send to your credit card provider.

If you have a smartphone app for your credit card provider or use online banking, you might be able to make your claim online.

Debit card payment protection and chargeback

Debit card payments and purchases are not covered by section 75 of the Consumer Credit Act. But you might be able to make a claim for a refund under a voluntary scheme called ‘chargeback’.

This might cover purchases of any value made on debit, credit or prepaid cards.

But if your purchase was over £100 and was made on credit card, you’re better off claiming under section 75, as this offers greater legal protection.

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How chargeback works

Chargeback isn’t legal protection like section 75. It’s an agreement Visa, Mastercard and American Express have signed up to.

The scheme enables you to claim a refund from your card provider if a purchase doesn’t arrive or is faulty.

If you make a chargeback claim, your card company tries to claim your money back from the company you’ve paid, by reversing the transaction.

There’s usually no minimum spend in order to be covered by chargeback, but time limits apply for making a claim – 120 days from making the purchase, depending on the type of card. If the purchase is for something in the future, for example, tickets to an event, then the 120-day limit starts from the day the event would have happened.

Chargeback claims can take some time to process because the card company has to get the money refunded before it can pass it onto you.

How to complain

If you aren’t satisfied with the response you get from your card company then you can make a complaint to the Financial Ombudsman Service. 

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Whatever your circumstances or plans, move forward with MoneyHelper.

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