Section 75: Protect Your Credit Card Purchases In The Economic Recession

27 October 2008

In recent months, we've watched airlines, banks, and big chains go bust, with plenty more are projected to follow in the near future.

The economic recession has led to plenty of businesses going under, and consumers are often left dealing with the mess and financial loss that's left behind.

If you've recently purchased airline tickets with your debit card or cash to escape these dark winter nights, beware.  Should your airlines follow in the footsteps of Zoom, Silverjet or XL, you're unlikely to be getting your cash back without a long, arduous good fight to the death.

The Credit Card To Your Rescue

We all been warned of the dangers of going overboard with credit, ending up in debt, etc.  But what you may not know, is that buying with credit cards vs debit cards give you a huge advantage with consumer security, thanks to Section 75 of the Consumer Credit Act of 1974.  This small-print less known secret method is the superhero to your rescue.

Section 75

It sounds almost like Area 51, and it stems from Section 75 of the Consumer Credit Act of 1974. In a nutshell, the section essentially states that all purchases valuing between £100 and £30,000 have automatic liability protection jointly responsible by the retailer/supplier and your credit card company:

(1) 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.

(You legal types can read the rest of Section 75 here [Swarb])

Essentially, if you make a purchase on a credit card and do not receive proper goods or services, Section 75 says that both the provider and your credit card company are jointly and severally liable to you, the debtor.  In other words, if you don't get what you paid for, it is a legal obligation for your credit card company or supplier to give you your money back.

What does that mean for you as a consumer?

Next time you book a nice holiday away or make a major purchase, do so with a credit card. If you buy a flight with cash, for example, and the airlines collapses, you will be stuck chasing your own tail, as it's been the case with Zoom or XL.

If you purchased with credit, you could avoid this headache.  All you have to do is file a claim with your credit card issuer and simply get your money back.  If you're not sure how to proceed, try, 'Sir/madam, you are violating Section 75 of The Consumer Protection Act of 1974'.  Talk about putting power in the hands of the consumer!

There are Exceptions

1.  This generally only works with credit cards, not cheques or cash withdrawn or debit cards (*Please see comments below for exceptions with Debit Cards. Thanks, R!) The Financial Obudsman states that section 75 will only apply given that there is a 'pre-existing arrangement' involving both the credit provider, and the supplier.  This means if you withdraw cash to pay for a purchase, or use credit card cheques, you will not be covered.  The credit card company holds no liability.

2. The item must be of a minimal transaction of £100. This must be the cash value of a single item, excluding fees, charges, etc.  This means if you bought 2 airplane tickets for £198 in total (£99 each), you won't be protected.

2. Watch for Business 'Loopholes'. Businesses may exploit the Consumer Credit Act by utilizing a separate business from one that provides the good and services to take the money.  Holiday club memberships and timeshare companies often use credit card facilities of another business.  A business accepting payment simply acts as an agent for a supplier, and are not considered 'associates' of the network, therefore section 75 will not apply.

3. Beware of Agencies. Buying airline tickets through a travel agent creates the same problem; travel agencies supply the ticket and not the flight.  So if the flight itself gets delayed or cancelled, you won't be able to claim under section 75 either.  There are exceptions to this, such as holiday packages: if this applies to you, take a look at case study 31/6 from the Financial Obudsman.

You also can't claim the same money twice, you greedy bum.

How to Claim

Now that you know about Section 75, there are plenty more resources to learn about your Section 75 rights and how to exercise them.   For starters, the BBC gives some Practical Advice on this topic.  Moneysavingexpert also has a pretty easy to understand guide and some further examples.

Got a claim?  Try Consumer Direct: they have a Section 75 template letter, which you just have to download and fill it and send off.  Job done.

How to proceed?  First point of call is your bank, if it's a bank issued card.  Otherwise, call the relevant credit card company.  Tell them you want to “make a claim under Section 75 of the Consumer Credit Act”, and a form should be posted to you.  Do be polite, as the Indian call centre staff may remain astounded by the mysteries of section 75, especially if they don't have a template default answer; explain that you're now in a secret sect of the Bitterwallet's inner circle, and they should call their supervisor, or get you to a UK based rep.

Final Thoughts

Remember that credit cards have alot of downsides.  Throwing people into debt and dealing with high interest rates are not very nice things.

So by all means, protect yourself in every way possible, but do make sure that you do pay your credit card off in full if possible to avoid interest.


  • R H.
    I thought Section 75 would apply to aDebit Card transaction if the purchase took took the Debit Card account into an overdraft?
  • Vince W.
    Hey R, thanks for your comments. You're absolutely correct. Technically, if you used the debit card to borrow, then you get the same protection as a credit card from the CCA (Consumer Credit Act). The FOS (Financial Ombudsman Service) states that if you have an overdraft facility, and the card CREATES the overdraft (so if you go from £10 to -£100), the card becomes a 'credit token' under the term of the CCA. So if you have an overdraft, it is certainly possible to utilize this, but it would be a bit more inconvenient than just using a CC and more complicated which is why it was generally omitted in the basic guide above; for every purchase, you will likely have to first get close to emptying your bank account, and use the card and create the token by going from + to -, and refill to make sure you don't end up getting (illegal) bank charges, especially due to the size of transactions (as most overdrafts go up to maybe £500 or £1000). This makes it impractical unless with foresight you think that particular transaction is worth the hassle. As a side note: a VISA debit card provides further protection compared to other forms of Debit cards, through the chargeback protection.
  • Sterling B.
    [...] through their website that they would not be receiving a refund. (more reason to have utilized Section 75 to avoid all that [...]
  • How B.
    [...] card. If a service provider fails to deliver goods or services you have paid for, your rights under Section 75 of the Consumer Credit Act mean that  your bank must help pursue the claim and compensate you for loss, as long as it is [...]
  • How B.
    [...] as Section 75 protects your credit cards, with a Visa Debit you have 120 days to file a chargeback claim with [...]
  • Donnell G.
    This was discussed last week wasn't it?
  • Know B.
    [...] year, we posted a few pieces on section 75 and the visa debit chargeback scheme. In recent months, as the economy has continued to sputter and [...]
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