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, as you might be able to claim from the credit card company. You might 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.

This 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 services, or has supplied goods that are not up to standard, or
  • The company has misrepresented what it is supplying - 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 under section 75, 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, or airline tickets.

A ‘family ticket’ would count as one item but individual tickets for family members would not.

However, you might 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 a deposit by credit card

You don’t need to pay the full price by credit card as paying a deposit is enough to get you the legal protection.

For example, if you bought something costing £200 but paid a deposit of £20 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.

You’re also not limited to the cash price of the items.

If you could claim from the supplier for additional expenses (e.g. postage) or consequential losses (e.g. damage caused by a faulty item), you have a like claim against the credit card company.

Second cardholders

The position is a bit more complicated if the purchase is made by a second cardholder, such as a husband, wife or partner.

Any claim has to be made by the main cardholder, as they are the one who signed the credit agreement), and the credit card company might reject a claim if it wasn’t a joint purchase (such as a family holiday_ or something for the main cardholder (such as a birthday present).

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’re 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

Top tip

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 costing between £100 and £30,000 and paid either a deposit or the full price on your credit card, you might 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 - 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 might 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, to give them a chance to put things right.

However, if they don’t reply, or they won’t give you a refund, or it’s clear there is not point in contacting them (as they have disappeared or gone into liquidation), 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. Include copies of receipts if you have them (if not, you’ll need some other proof of purchase).
  • Tell them that you’ve tried to contact the company you bought the goods or services from and what the response has been – if any.
  • Explain what you’d like the credit card company to do, which will usually 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.

Understanding chargeback

Debit cards are not covered by section 75 of the Consumer Credit Act, although they offer a similar, voluntary, scheme called ‘chargeback’.

You can also use this to make a claim if you use your credit card to buy something costing less than £100 or less.

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 – usualy up to either 45 or 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.

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