Paying on a credit card can protect your purchases… sometimes

The law covers a huge range of scenarios, like your online shopping vanishing in transit. It can also help you get a refund if the business building your conservatory goes bust or if you’ve been tricked into buying a dodgy timeshare apartment.

It’s not all straightforward, though. Claims made under section 75 have to meet certain criteria and are looked at on a case by case basis.

What are my rights under the law?

If you pay for goods or services that cost between £100 and £30,000 on a credit card, the credit card provider is jointly responsible, along with the supplier, for any breach of contract or misrepresentation. You don’t need to complain directly to the supplier, either – though I strongly recommend you do.

You’re even covered if you’ve only paid for a deposit for something on your credit card – and in theory, that deposit amount can be under £100 as long as the total cost of the goods is between £100 and £30,000. In cases like this you’re still covered for the whole value of the item in question.

The rules and the quirks

Much as I love the Consumer Credit Act, it’s even older than me! And though it’s been updated a few times, the way it’s worded doesn’t always fit with the way we live and shop today. Here are some of the main exceptions and complications with the rules.

Top of the list is the dreaded “debtor-creditor-supplier” rule. To paraphrase the law, in order to have the protection of section 75 you have to buy direct from the supplier of goods. If you buy through a third party, you’re not covered as this “breaks the chain”. We often do this through “online marketplaces” that don’t supply the underlying goods or services. A holiday booking comparison site would be a typical example of this.

Using a third party payment system can cause problems with claims under section 75.

Even if you’ve linked a credit card to an e-payment firm like PayPal, you may find that this doesn’t count and you aren’t covered. This is the most contested of the section 75 rules, so it pays to be aware of risks when purchasing using e-payments.

Goods must be for “your benefit”. If you buy a flight on your card for yourself, you’re covered under section 75. If you buy one for your partner, you may not be (though some credit card companies might let you off). You could argue that things bought for your partner’s pleasure are for your benefit – but this may not work!

Deposits can cause problems. If you buy a car for £10,000 but pay a deposit of £50 on your card, your card provider is theoretically liable for the full amount in the event of a successful section 75 claim.

However, I’ve seen a few cases where credit card companies have rejected complaints where deposits were under £100. You can go to the Financial Ombudsman about this or any other credit card disputes.

The quality of goods can be open to interpretation. For example, if you buy a timeshare, you've technically got what you paid for.

But what if you were misled or tricked, for example, the apartment is in a different place, isn’t built yet, or is falling apart? The law uses the term “misrepresented” to explain what should qualify for section 75 protection – but that’s open to interpretation. Once again, you can always appeal to the FOS.

Finally, multi-purchases adding up to over £100 don’t count. Each single purchase must be over £100.

But what about a sheet of 75 first class stamps? Is that one purchase or 75? In these circumstances, most card companies will apply a bit of pragmatism if it’s a low value item.

Martyn James is a leading consumer rights campaigner, TV and radio broadcaster and journalist. Read more from him at this link.