Section 75 loopholes: why your credit card claim could be rejected, and how to avoid them

What's happened

Which? has warned that shoppers relying on Section 75 of the Consumer Credit Act to get their money back are being caught out by loopholes that didn't exist when the law was written in 1974. In an investigation published on 8 October, it sets out real cases where claims were turned down because of how something was paid for or whose name was on the booking.

Section 75 makes your credit card provider equally responsible with the seller if something you buy for between £100 and £30,000 doesn't turn up, is faulty or not as advertised, or if something goes wrong during the contract, such as a badly fitted kitchen. It covers credit cards, store cards, point-of-sale loans and catalogue accounts. Since buy now, pay later products such as Klarna and Clearpay came under Financial Conduct Authority (FCA) regulation in July, they can be covered too.

"Section 75 of the Consumer Credit Act is the ultimate safety net for shoppers," said Tony Herbert, senior policy adviser at Which?. "As the CCA was created way back in 1974, it understandably hasn't kept up with the ways consumers now shop."

Who's affected

Anyone paying for bigger purchases on credit, especially with Christmas and holiday bookings coming up. Lloyds Banking Group and Nationwide told Which? that most disputes involve travel, holidays, vehicles, home improvements and electrical goods.

The protection depends on an unbroken link between you, your card provider and the seller. Which? highlights three common ways it can break:

• Middlemen. Paying through PayPal, booking platforms or marketplaces that host third-party sellers can lead card providers to argue the link is broken. PayPal told Which? that Section 75 applies with PayPal Credit, Pay in 3 and guest checkout, but paying by card while logged into a PayPal account is more complicated.
• Buying for someone else. What you buy generally has to benefit you. A flight bought only for another person is unlikely to be covered, and gifts are assessed case by case.
• Names on the paperwork. If the booking or contract isn't in the cardholder's name, a claim can fail.

What it means in pounds: a worked example

One case in the Which? investigation shows how much the small print matters. Helen booked two holiday lodges for a family party of 11, splitting the cost into two payments of £1,139: one on her credit card and one on her husband's. That's £2,278 in total.

The lodges weren't as advertised, so both made Section 75 claims. Her husband's claim was partly accepted and 25% of his payment was refunded, which works out at about £285. Helen's was rejected because the overall booking confirmation was in her husband's name only, and the Financial Ombudsman Service agreed. Her refund: £0.

Had the whole £2,278 gone on the card of the person named on the booking, and the same 25% refund applied, the family could have recovered around £570 instead of £285. Same holiday, same problem, roughly double the money back.

It can go the other way too. Another Which? member, Howard, bought a watch on eBay that turned out to be counterfeit. When it broke 18 months later, eBay's resolution window had closed, but his card provider refunded the watch and the £20 he'd paid a jeweller to confirm it was fake.

What to do now

1. Buy direct where you can. Which? says buying straight from the seller keeps the legal link intact. Booking a holiday directly with a firm such as Jet2holidays, rather than through a third party, keeps things simpler if something goes wrong.
2. Pay on the card of the person named on the booking. If you're paying, make sure the contract, booking or receipt is in your name too.
3. Check the price. Section 75 covers items costing between £100 and £30,000. Below that, ask your bank about chargeback, a voluntary scheme run by card networks such as Visa and Mastercard.
4. Keep evidence. Photograph faults, save emails and keep a record of your attempts to sort things out with the seller.
5. Be specific. Which? suggests explaining exactly which legal duty has been broken, for example that goods weren't "fit for purpose, as described, and of satisfactory quality" under the Consumer Rights Act.

Your questions answered

How long do I have to make a claim?

Up to six years in England, Wales and Northern Ireland, and five years in Scotland, according to Which?.

Can I claim if I've just changed my mind?

No. Section 75 is for breach of contract or misrepresentation by the seller, not for purchases you no longer want.

Is Section 75 about to change?

The government published plans in May to modernise the Consumer Credit Act, but Which? reports that Section 75 won't be affected in this round of reforms, and no timeline has been set for that work.

Ways to save

For big purchases like a washing machine or TV, paying by credit card and clearing the balance in full gives you extra protection at no cost. Buying from a retailer such as Currys directly rather than via a marketplace seller keeps the claim straightforward. Check our latest codes before you pay.

Sources: Which?, Financial Ombudsman Service

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