Guide to section 75 of the consumer credit act
Although not widely understood, 'Section 75' offers shoppers using UK-issued credit cards some of the most powerful purchase protection in the world. It is available from practically any credit card, it applies regardless of your payment history, and it's free.
What is Section 75?
Section 75 of the Consumer Credit Act 1974 was originally intended to offer protection to customers purchasing with hire purchase agreements, which made no provision for product issues.
Regardless of whether a product was faulty, or even received, debtors were legally obliged to make repayments, since the debt was often owed to a third-party creditor, and not the merchant the product has been purchase from.
Section 75, by directly linking the credit used to the goods bought, made the credit supplier liable for product issues, as follows:
"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."
What are your Section 75 rights?
Section 75 is relatively incomprehensible, yet these 61 words have saved countless Britons many millions of pounds.
In a nutshell, Section 75 states that suppliers of credit linked directly to a product (like credit card issuers) have equal liability with merchants for ensuring that goods are not misrepresented and are of sufficient quality. If there are problems with products, the credit supplier is directly responsible for refunding the customer's money.
How Section 75 works
Section 75 applies to purchases from £100 to £30,000 when at least part of the transaction was made using credit directly linked to the product.
Claims can be made on goods (and services) that are:
In other words, if a product was faulty, damaged, or failed to arrive, and you had paid a single penny of the purchase using credit directly linked to it, you would be able to claim the full amount of the purchase price under Section 75.
When you're not covered
In many instances, Section 75 is very straightforward. Undelivered and damaged items need little interpretation. However, some cases can be more subjective, and Section 75 isn't always the 'catch-all' protection it first appears.
If something doesn't work, then it is obviously faulty and covered by Section 75. However, sometimes the fault is only observed in the eye of the beholder, because it does not meet their expectations. In these instances, assuming the product was not misrepresented, it is unlikely to be considered faulty.
For instance: If you bought some carpet from a showroom and it looked different in the lighting conditions of your living room, you would not have a claim.
Goods below £100
Section 75 only applies to goods costing more than £100 (excluding any other fees or charges), but the definition of a single item isn't always straightforward.
If you buy a return ticket from London to Glasgow, and your airline goes bust, you're able to claim. However, if you bought two separate one-way tickets for £75 each, they wouldn't be protected.
Goods bought with cash
For Section 75 to apply, the credit used must link directly to the goods purchased. If you've used money from a personal loan to buy a fridge costing £101, you will not get the same protection as if the same purchase was made using a credit card or in-store credit. Equally, if you withdrew money from your credit card at an ATM, and made the same purchase, you would not be protected.
No direct link to credit
If a direct link between the goods purchased and the credit used is not established, Section 75 will not apply. However, even those who think they have created a link can be caught out.
Third-party payment systems, such as Paypal, Amazon Marketplace, Worldplay, eBay and Google Checkout, all break the credit link. You are, in effect, paying them and not the merchant, so no direct link is created.
If you are making a high-value transaction, you'll need to decide whether the limitations these technologies place on your consumer rights are acceptable.
Misunderstanding what you're buying
Section 75 only covers goods up to £30,000. If you're making purchases above this amount, you will not be covered. Equally, if you are part-paying a lower amount of a total which exceeds £30,000 you will not be covered (even for the lower amount).
For instance: You want to buy a supercar costing £100,000, and you pay a £5,000 non-refundable deposit towards it. If you later discover you can't arrange a loan for the balance and are forced to forfeit your deposit, you cannot claim under Section 75. This is because you have not bought a deposit; you have bought an item costing well above the £30,000 cap on Section 75 refunds.
There is no such thing as a joint consumer credit card in the UK. Every credit card must be applied for and be held in the name of one individual, regardless of how many additional cards are associated with it. Section 75 only protects purchases made by, or for the main benefit of, the primary account holder.
For example: If a married couple both had cards linked to the same account, and the supplementary cardholder purchased faulty goods, they would not be covered under Section 75 unless the goods were mainly intended for the benefit of the main account holder (e.g. A birthday present for them).
Credit not debit
Section 75 is sometimes confused with the 'chargeback' protection that some debit card holders enjoy. However, the two are very different. Section 75 is a statutory protection for users of credit, whereas chargeback is a voluntary scheme, and regulators have no power to ensure its enforcement.
Consumers, not companies Section 75 is a consumer protection and does not apply to incorporated businesses.
Claiming under Section 75
The Consumer Rights Act 2015 increased the clarity of UK consumer rights, requiring goods to be of satisfactory quality, fit for purpose and as described, and before you claim under Section 75, you should seek redress under this legislation.
However, if this fails, for whatever reason, you should contact your lender/bank, explaining that you are looking for a refund under Section 75 of the Consumer Credit Act 1974.
Most banks have specific claims forms for this process, which include fields where you can detail:
Of course, if your bank does not offer such forms, you can simply write them a letter, outlining your claim, including this information (do not send original receipts).
Once your bank has all of the required evidence, they will begin an investigation to assess your claim. If your claim is valid, your bank will credit the monies owed to your account.
However, if your lender does not accept your claim and refuses to pay, and you disagree with their assessment, you can request a ‘letter of deadlock' and refer the dispute to the Financial Ombudsman Service (FOS). You can also refer your dispute to the FOS if your lender takes more than eight weeks to complete their investigation.
You might assume lenders let cases get referred to the FOS automatically, so they only pay what they need to. However, this is strongly discouraged by the 8% interest they must pay on claimed amounts and the awards for 'inconvenience caused' that the FOS can impose.