Section 75 is an incredibly useful piece of legislation as far as consumers are concerned. It means that your credit card company needs to step in and take responsibility if a purchase you make using your card ends up being a rum deal. For example, if the goods in question were not as advertised, or fail to be delivered.
It only applies to purchases that cost between £100 and £30,000, but it ensures that if you are left in the lurch having paid for something, then you will not have to incur any debts because of it. It also dramatically increases your chances of getting a refund, as the credit card company has just as much onus on them to get you your money back as the supplier does. This means that, even if the company you’d bought from no longer exists (say you ordered some bespoke piece of furniture and the company went bust before producing it) you can still recover the funds.
Thus, when you are making a purchase that falls into the applicable price bracket, as well as helping you budget for it, using a credit card also can offer you an extra bit of peace of mind.
It doesn’t just apply to credit cards either. Credit agreements taken out to pay specifically for goods and services are also covered and arrange credit for a particularly large item such as a vehicle and the upper limit is increased up to £62,260. It needs to be remembered that a personal loan is not covered because, even though it may have been applied for and approved with a specific purpose in mind, you could still technically spend the money on anything.
For the sake of clarity, please bear in mind that the primary function of this law is to prevent people falling into debt and getting black marks on their credit file for the sake of a product that they never even received or that was faulty. If you are just handing over cash, a cheque or using a debit card to pay money straight out of your account then there is no question of interest piling up. It’s just a one off payment at a set price. This has the benefit of being cheaper and quicker in that, you only pay for the product not the credit. However, it does mean that you are excluded from section 75 protection. You need to think about this when deciding how to pay for products and services.
Of course, the protection that comes with using a credit card isn’t really going to offer you all that much piece of mind if it leaves you with a mountain of interest to surmount. Therefore, you need to make sure you are getting the best of both by buying using a credit card but ensuring you have a direct debit from your current account set up to pay the card off in full each month.
If you don’t have one, it might be worth looking for a card with a period of 0% interest that you can use to make the purchase you are planning.
In some cases section 75 might not be of help to you. Purchases of land, for instance, are not covered. If you have a card with additional holders, you can only claim under section 75 if the product in question doesn’t provide a benefit for the primary holder. If it’s solely for the additional holder and they are the one who made the purchase you might be out of luck.
Buying through a third party also makes things tricky. Online payments that go through processors such as PayPal may not be eligible. The same is true of things like flights bought through a travel agent but not actually supplied by them. Group buying offers through voucher sites are another example of an area where you might run into trouble. Independent sellers using Amazon can also pose a risk.
If you don’t use the card directly, you’ll also be turned down. For instance, you shouldn’t withdraw cash using the card and then try and pay that way. It won’t count as a transaction using credit, even though you will need to pay interest on the cash you took out. (You should really just avoiding using your credit card at cash machines altogether.)
It can also be tricky if you perceive the purchase to have been one purchase worth more than £100, but it wasn’t sold that way. For example, you could buy a tool and a power adaptor for £90 and £20 respectively and not be covered. At the same time if they are sold together in a single bundle for £110 you are covered.
If you need to make a claim using section 75, you need to contact your credit card company and make it clear to them that your using section 75, and that, even if they want to try and claim back money from the supplier/provider of the product or service in question, they are equally liable to pay you and that you expect them to do so.
If they are still in business, it can be easier to approach the supplier themselves. However, if you cannot do this, simply insist that your credit card company give you a claims form. You need to bear in mind the possibility that when you get through to the call centre the person you are talking to may not be au fait with the law. If this is the case you will have to polite but firm in insisting on your rights. If for any reason they try and mess you about, simply tell them you will take the issue to the ombudsman. They will be able look into the case and enforce the law for you.