Credit cards have a bad reputation due to irresponsible lenders and borrowers, but they sometimes have useful applications when exploited in the right manner. One of the lesser known benefits is that some purchases made on credit cards are protected by 'section 75' of the Consumer Credit Act. But what is it exactly, and how can you take advantage?
In a nutshell, section 75 basically states that the credit card company is jointly and/or individually responsible for any breach in the sales contract, including misrepresentation of the item by the merchant. This means the credit company are just as liable as the retailer (etc.) to provide a refund if you are dissatisfied with any aspect of your purchase.
It's particularly useful if the original trader is non-contactable due to bankruptcy or whatever, but it's worth noting that you don't have to reach this 'stalemate' before making a claim – you can actually claim via both the retailer and the credit card company at the same time (although you can only get refunded once!)
Section 75 is pretty much all encompassing on transactions from £100 - £30,000, regardless if they were bought via mail order, telephone, internet or even abroad.
Making a Claim
Unfortunately items under £100 don't qualify for section 75 protection. However, only part of the transaction has to be made via credit card for the bank to be liable for the full amount! For example, if you found a nice antique shoe-horn for £200, paid an initial £20 deposit on your credit card, then returned at the end of the month the pay the remaining balance from your wages, the whole of the purchase is covered by section 75. The thing to remember is; it's the total value of the goods that counts and not the amount that you're paying by card.
Section 75 gives you the same rights against the bank, as it does against the merchant. There are a number of incidents where you might need to claim, and if it seems reasonable to expect it of a merchant, then it's likely that it's covered under section 75. So if your claim against the trader is for the cost of repairing an item, you should be able to file a section 75 claim as well. Likewise if goods don't show up at all, you can reclaim the cost from the bank. And the same can also be said in respect to good that arrive as poor quality or 'not as described'.
As with anything, there are a few exceptions to the rules. If you're making a payment through an online payment service, such as PayPal, the initial transaction is that of you loading up your account etc. You may have trouble claiming in any instances where the purchase has been made via an agent, rather than directly with the merchant.
Cash withdrawals are also not covered, as there needs to be a direct link between the merchant and bank in order for section 75 to apply.
Sadly you can't claim for debit card transactions – it's merely for credit card transactions, where you're technically being lent the money to make the purchase.
If you're purchase is under £100 you may be able to claim via 'Chargeback', regardless of whether it's a credit or debit card purchase. For more information, please refer to our article 'Get Refunded For Shoddy Goods via 'Chargeback'
If your provider rejects your claim, you can consider escalating it to the Financial Ombudsman, which is a free service. Before doing so you'll need to request a letter of 'deadlock' from your provider to show the Ombudsman. Alternatively if more than 8 weeks have passed since your rejection, you can open a case with the Ombudsman straight away