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Your Guide to Section 75: Your Cunning Credit Card Protector

 

How much do you know about your credit card?

Other than it's far too easy to spend too much money on it…


Did you know, for instance, that some of the payments you make on your credit card gain protection from a rule called Section 75? It might not have the catchiest of names, but Section 75 could soon become your favourite tool when it comes to defending your finances.


According to Section 75, credit cards must always have cover for purchases between £100 and £30,000.


Intrigued?


In simple terms, Section 75 says that, according to the Consumer Credit Card Act, you're defended whenever something goes wrong with a purchase of over £100. That means that if the business you bought from goes bust, or you never receive your tickets for your next flight - you'll be fine.
Tell Me More about Section 75…


Ultimately, Because of the Consumer Credit Act (enacted in 1974), credit card companies are just as liable for any breach of contract between you and a retailer.


This means that you can make a claim with your retailer and credit card provider when something goes wrong simultaneously. You can't recoup your losses from both (that would be cheating). However, you can double your chances of someone getting your money back into your account. If your retailer is dodging your calls, then you're safe and sound under Section 75.


The great thing about Section 75 is that it's an actual law. It's not just about the credit card provider being ethical and giving you a break when you're cheated out of your purchase. If you pay for something that costs between £100 and £30,000 on credit - you're legally defended - no ifs or buts.


It all makes using your credit card so much more appealing, doesn't it?

 

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What Exactly Does Section 75 Cover?


So, exactly what is protected by Section 75?


The first thing you need to know is that your defence applies to most credit card agreements - but not all of them. It's a great form of protection, but it's not foolproof.


The main area protected is obviously your credit card payments. However, the law will also apply for any store instalment cards you might have, store cards, and even certain car finance agreements. It's worth doing some digging if you're not sure whether the rule applies to you.


Notably, you can apply for Section 75 protection in a range of circumstances. Even if your goods arrive faulty, or you don't receive a delivery that you've paid for - you'll still have the right to tap into that Section 75 goodness.


Need an example?


• You buy flights for your family for a vacation, but your airline goes bust
• You purchase a product from overseas that never reaches you
• You buy a computer from a local store and discover it doesn't work
• You've paid for a service that isn't delivered


In all of these cases, your credit card provider is just as liable to refund you as the company you buy from. That's why many financial experts in the UK recommend buying at least part of your large purchases with credit cards. After all, if you discover a problem with something you buy via credit card, you're eligible for a much higher range of protection.


Let's face it; it's hard to prepare for everything these days. Section 75 just gives you that extra dose of peace of mind that we all need.

What Won't Be Covered by Section 75?


Even the best financial laws and regulations in the world can't shield you against everything.
There are a handful of issues out there that escape the safety net offered by Section 75. Before you start drafting your angry letters, it's best to check the rules.


For example, you can't rely on Section 75 to come to your rescue for any problems that result from the purchase of land. Buying land is a whole different ball game covered by the Financial Conduct Authority.
Another major exception is that you won't have protection when you buy anything that costs less than £100. Even if you buy a watch for £99.98 on your credit card, you still won't be eligible for section 75. The protection offered by Section 75 only kicks in when you pay more than £100, and you're using a credit card.

Unfortunately, charge and debit cards don't count. Other purchases that slip through the safety net include hire purchase agreements, and some purchases made through a third party.


It's also challenging to apply for Section 75 protection if an "additional cardholder" made the payment, instead of the primary credit card owner. For instance, imagine that you were buying a sofa with your spouse's credit card. Even though you're an additional cardholder on that account, it's best to ask your partner to buy the item.


Purchases made by secondary cardholders may be covered, but it's easy for the provider to argue against them. Most of the time, if a purchase is made with the initial card holder's authority, then you'll be able to make a claim. If you're worried about being shielded from any issues with large purchases, play it safe and have the primary cardholder do the buying.

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If You Aren't Covered by Section 75...


The good news is that you're not entirely out of luck if you can't access Section 75. Where this rule doesn't apply, there's another regulation you can consider called "Chargeback." This solution allows a credit card provider to reverse one of the payments that you've made if they think you're making a valid complaint. Most of the time, credit card issuers will struggle to argue with you if you say you want your money back because a company went bust before they sent you your product.


Other reasons for requesting a chargeback include:


• Non-delivery: You never receive the item you buy.
• Poor quality: The goods were defective or not as described.
• Technical problems: Processing errors by your bank - for instance, if you're charged twice for only one item.
• Fraud: Someone got their hands on your card, and you're not responsible for the purchase.
• Administrative issues: The price you pay for the product/ service isn't correct.


The most significant difference between Chargeback and Section 75 is that Section 75 is a legal requirement in the UK. Unfortunately, Chargeback is just a part of the internal rules used by card providers like Visa and Mastercard. It's up to them to decide whether you're eligible to get your money back.

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Understanding the £100 Minimum Spend


One problem that some customers have with the Section 75 ruling is that they don't know whether the bill they get or the item they buy needs to be over £100. In other words, do you need to buy something that's at least £100.00 in value, or does it count to purchase a product for £98.99, and pay £2.99 delivery?


This is where things get complicated.


Ultimately, it depends on what you're buying. For instance, if you buy two flights from the same company as part of a package deal for £140.00, then those flights will be covered by Section 75. On the other hand, if the two flights are sold separately for £70.00 each, you won't be protected.


Similarly, if you buy a suit and jacket that are individually priced at £55 each, you won't be covered - even though the complete purchase comes to over £100. However, if the two items are sold as a set for £110, you will be covered. This can get more complicated depending on who you're buying from, and what you're purchasing. If the company you're dealing with links your transactions together, then you should be covered.


It's also worth noting that you don't necessarily have to spend the full £100 on your credit card to access Section 75.

Confused?


Here's a trick to help. If you pay the deposit for an item or service using your credit card, then you're protected. The law outlined by Section 75 demands that customers are given full protection for the total cost of a service or item - even if they're only paying for a fraction by credit. Even a single penny spent towards an item on your credit card would give you protection. The only condition is that the total cost of the product or service should be more than £100 and less than £30,000.

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What Are the Rules with Third-Party Payment Processors?


While every credit card in the UK comes automatically equipped with Section 75 benefits, there are still reasons why a provider might reject your claim. For instance, card companies can sometimes weasel out of their Section 75 obligations if you buy something through a third-party.


For instance, if you pay for your family holiday through a real-estate agent, then the rules are different. Technically, the laws require a direct link between the customer (that's you), and the creditor (the card company). There also needs to be a connection between the card company and the supplier (the business selling the goods/service).


If the relationship isn't complete because of the involvement of a "middle man," then Section 75 won't always apply. The trouble is that the Financial Ombudsman service doesn't give a lot of clear advice about when third-party suppliers will get in the way of your claims. For instance, The Financial Ombudsman Service suggests that Section 75 is "unlikely to apply" when paying for items via Google Pay.


Similarly, if you decide to pay for your product via PayPal, you may not be eligible for Section 75. Even if your credit card links to your PayPal account, so the money technically comes out of that account, some people may argue that the presence of a third-party nullifies Section 75. However, other companies suggest that if the funds go directly to the seller, and the business you're buying from is involved in a "commercial entity agreement" your application should be approved.


If, for any reason, your credit card provider refuses to comply with Section 75 when you buy an item via PayPal, remember that the service has an additional protection scheme for buyers.


In some cases, you may also find that it's not possible to claim Section 75 protection if you buy a product using your card and discover an issue while that product is under warranty. If the warranty is with the original manufacturer, you may have a problem, because the contract at the point of sale is with a supplier or retailer. This means that the links between creditor, debtor, and supplier are broken. However, you might be able to claim if your warranty is issued by the supplier or retailer instead.


You also won't be able to apply for Section 75 protection if you use your credit card to make a cash withdrawal for a purchase. This is because there won't be any link between the company that issued your credit card, and your chosen retailer. Since credit card cash withdrawals typically come with hefty fees, it's probably best to avoid them anyway.


Often, figuring out how to use Section 75 involves spending some time working out how all of the legal loopholes work.

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Making a section 75 protection claim.

Now that you know the basics of Section 75 protection, it's time to figure out how you can make a claim. Remember the limitations that we covered above. You may not want to waste your time with an application if your purchase:


• Went through a third-party
• Was paid for by a card other than a credit card
• Was less than £100 or more than £30,000


Section 75 also requires your credit card provider and the person selling you the goods to be two separate entities.


To begin your claim, contact your credit card company. You're still allowed to claim on a credit cards account that's closed. Remember, you're claiming with the company, not Visa, Amex or Mastercard. If you've got an HBSC Visa card, your complaint goes to HBSC, not Visa.


If the retailer or supplier is still alive and kicking, then you might want to pursue a refund with them first. Ultimately, you don't have to go to the retailer first. The credit card company is just as responsible for your money as the retailer is. However, you might find it easier to tell the card company that you've already contacted the retailer and had no luck.


Credit card companies typically have deeper pockets than the average retailer, so it can be easier to claim your money from them than from a business. Small firms often fight tooth and nail to avoid paying money out to their customers. Credit card companies will give you the cash you request just for an easy life most of the time.


What if the Supplier/Retailer is Out of Business?


If your retailer or supplier goes bust, your only option is to take your Section 75 claim to the credit card company. Grab the number or email address of your credit card provider and let them know what the problem is. You can say something like "I'm claiming under Section 75 of the Consumer Act regarding a retailer that has gone bankrupt."


Most of the time, your provider will just send a claim form to your home in the mail. In some circumstances, you might be asked to get an independent party to verify a fault or an issue. If the company asks for this and accepts your claim, then you'll be reimbursed the costs associated with acquiring an expert opinion too. Don't worry too much about this - most providers won't bother asking for independent verification.
If your card provider tells you that they're trying to claim the money back from the business in administration, don't just leave the issue there. Remember, the card company is 100% liable for the money you're owed too, so you can still ask them to give you your cash - regardless of what happens with the bust retailer.


If your credit card provider doesn't help you for any reason, contact the Financial Ombudsman Service to make a complaint. Doing this is completely free, and you can access a claim form on the FOS website. The Ombudsman Service will begin looking into your issue as soon as possible. Remember, going to the FOS is much better for you (and your finances) than going to court. If you take a business or credit card provider to court, you'll need to pay a fee - and that cost will only be covered for you if you win. What's more, while courts will only look at the law, the FOS examines:


• Whether you've been treated "fairly."
• Standard industry practice

How Long will The Claim Take?


Importantly, there's no deadline on when your card provider needs to resolve a Section 75 dispute. However, that doesn't mean you need to wait forever. If you're unhappy with how long your claim is taking, then you can complain to the card provider, and they'll have 8 weeks to respond. If you still don't get the response that you're looking for, then you can ask for a letter of deadlock. This simply indicates that your provider doesn't believe you have a claim. You can use your letter to take your dispute to the Financial Ombudsman Service directly.


If you've waited more than 8 weeks for a response, then you can refer your issue to the Financial Ombudsman Service without a deadlock letter. You'll also be able to approach the FOS before the 8 weeks is up if your card provider gives permission.


Remember that if you're claiming for "consequential losses", your money might take a bit longer to come through too. Section 75 protection allows you to claim for additional expenses that you had to handle because of your original claim. For instance, if you bought a second-hand car with your credit card and you suddenly break down in the middle of nowhere, you might need to pay for a taxi home and a recovery vehicle.


Section 75 regulations suggest that you should be able to claim for the cost of your rescue as well as the price of the purchase.

 

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