How you’re protected when you pay by card
Paying by credit card can give you valuable legal protection if the company you’re buying from goes bust or doesn’t deliver what it’s promised, and you may be able to claim a refund from the credit card company. You may also get some protection when paying by debit card under a voluntary scheme. With charge cards you don’t generally have protection.
Your rights when buying by credit card
If you use your credit card to buy something, such as goods or a holiday costing over £100 and up to £30,000, you’re covered by ‘section 75’ of the Consumer Credit Act. It means the credit card company has equal responsibility (or ‘liability’) with the seller if there’s a problem with the things you’ve bought or the company you’ve bought them from fails.
Problems that are covered
- The company has failed to supply the goods or have supplied goods that are not up to standard, or
- The company must have misrepresented what it is supplying or selling; for example, a software supplier that says a software package you’re buying will work with a particular computer when it doesn’t.
Minimum and maximum spending limits
To qualify for protection from your credit card company, you have to spend between £100 and £30,000. The £100 minimum amount applies to each item or set of items you buy, as opposed to the total bill. For example, if you bought a dress and jacket that weren’t part of a suit, with each one costing less than £100, you wouldn’t qualify for the consumer protection under section 75.
Another example would be buying tickets for an event. A ‘family ticket’ would count as one item but individual tickets for family members would not. However, you may be able to make a claim against your credit card company under a voluntary scheme called ‘chargeback’ which we explain in the Understanding chargeback section below.
Paying the deposit by credit card
You don’t need to pay the full price by credit card as paying the deposit is enough to get you the legal protection. For example, if you bought something costing £200 but paid a deposit of 10% on your credit card and the rest by other means you’d still be covered and you would be able to claim the whole £200 (and not just the deposit) from your credit card company if the goods didn’t arrive or were faulty.
If you’re a second cardholder, perhaps because your husband, wife or partner is the main account holder, you may be entitled to the same legal protection from your credit card provider. It’s a bit of a grey area so it’s worthwhile checking with the card issuer at the outset, but in broad terms you are likely to be covered if:
- You bought something which was for both of you or for the main cardholder, such as a family holiday or a birthday present, and
- The main cardholder makes the claim – it’s the main cardholder who signs the credit agreement so they are the person covered by the protection.
How holidays are covered
It doesn’t matter whether you use your card to buy something in the UK or overseas, you’re covered in exactly the same way.
If you booked a holiday and paid the deposit or full price on your credit card and it cost between £100 and £30,000 you may be able to make a claim if the airline or holiday company goes bust or the holiday isn’t as described. But, not all situations are covered.
What is covered:
- The cost of your flights if the airline goes bust.
- The cost of your holiday if the holiday company goes bust.
- Additional expenses or consequential loss so you’re not limited to claiming the cost of the item. You may also be entitled to more; for example, if you had to buy more expensive flights to get home after an airline failed.
What isn’t covered:
- In some cases, if you buy a flight only from a third party, such as a travel agent, you may not be able to make a claim because the third party was only contracted to provide the tickets and not the flight.
- Any costs that you didn’t have to incur – for example, if you decided to extend your stay after the airline went bust (longer than you needed to) you’d be unlikely to be able to claim for extra costs.
How to make a claim if you paid by credit card
If you pay for something on your credit card and there’s a problem, your first step should be to contact the company you bought it from. However, if you don’t get a reply from them, or they won’t give you a refund, you can make a claim against your credit card company. You should:
- Write to the credit card company, stating what you bought, where and when you bought it and how much you paid, including copies of receipts.
- Tell them that you’ve tried to contact the company you bought the goods from and what the response has been – if any.
- Explain what you’d like the credit card company to do, which would be to refund the purchase price into your credit card account – be sure to state: “I am making a claim under Section 75 of the Consumer Credit Act”.
- Keep a record of the letter or email you’ve sent.
Debit cards are not covered by ‘section 75’ of the Consumer Credit Act, although they offer a similar, voluntary, scheme called ‘chargeback’, which you can also use to make a claim if you use your credit card to buy something costing less than £100.
How chargeback works
Chargeback isn’t a legal protection like section 75. It’s an agreement that Visa, Mastercard, Maestro and American Express have signed up to. The scheme enables you to claim a refund from your debit card provider if:
- A purchase doesn’t arrive or is faulty
- You buy something for example costing less than £100 where section 75 doesn’t apply using your credit card.
It works by the card company trying to claim your money back from the company you’ve paid, by reversing the transaction.
There’s no minimum spend in order to be covered by chargeback, but time limits apply for making a claim – which may be up to 45 and 120 days from making the purchase, depending on the type of card.
Chargeback claims can take some time to process because the card company has to get the money refunded before it can pass it onto you.
How to complain
If you aren’t satisfied with the response you get from your card company read our guide below to check next steps.