How paying by credit card can save headaches

But did you know that paying for things on your credit card can give you an extra layer of protection if you are in a dispute with a business, or if they go bust? Here’s my guide to making a claim under the Consumer Credit Act (CCA).

What are my rights if I buy things on a credit card?

The CCA says that if you pay for goods or services with a credit card or certain specific types of credit agreement you could get a refund from the credit provider as what you buy costs between £100 and £30,000. This is known as a ‘Section 75 claim’.

You can make a claim if:

• The goods or services you’ve paid for don’t turn up.
• The goods or services aren’t as advertised, are faulty or have been ‘misrepresented’. Something goes wrong during the contract (like a badly fitted conservatory, or an ongoing service changes or is cancelled).
• The firm goes bust.

Surprisingly, you’re also covered if you’ve only paid a deposit on your credit card. The deposit can even be under £100 as long as the total cost of the goods or services falls between £100 and £30,000 you can claim for the full amount. This makes paying a deposit on a credit card for a new kitchen or a ‘big ticket’ purchase exceptionally worthwhile.

There are a ton of exceptions to the rules, so don’t assume that everything you pay for will be protected.

What are the other main rules that apply if you want to make a Section 75 claim?

Of course, it’s not all that simple! If you want to protect your purchases, then a number of other conditions apply, including the following:

• Your credit card must be provided by a UK-based company and your card must be registered in the UK.
• You are only covered if you buy directly from the supplier of goods or services, not a third party. This is known as the debtor-creditor-supplier relationship and is the source of most of the Section 75 disputes that I see. It’s also ridiculously complicated.
• Debit card payments, bank transfers, money transfers and e-payments are not covered by the Consumer Credit Act. Though chargeback may be an alternative option (see below).

The purchase price must relate to a single item, not a combination of purchases with a combined value of over £100.

How can chargeback help me get my money back?

If you’re having a problem with a business that has missold or misrepresented goods, rejects a complaint or looks like it’s about to go under, you can ask your credit or debit card provider to ‘charge back’ the money.

Chargeback is an industry-run scheme that banks and credit card companies have signed up to. It’s not the law, but it is ‘good practice’ – in other words, businesses must abide by the rules. You can also go to the Financial Ombudsman about chargeback if you’re not happy.

Credit card companies will usually attempt a chargeback in the first instance if you tell them about a problem. This is because it’s cheaper and easier to do so. However, failing that you can still make a Section 75 claim.

As with Section 75 claims, there are exceptions to the chargeback rules. In most instances, you’ll have a maximum of 120 days from the date you make your purchase to charge back your money.

Now… a warning

Section 75 protection is a wonderful thing, but it’s by no means guaranteed. Retailers often dispute cases and you may have to go to the Financial Ombudsman (for free) if there’s a dispute.

But most importantly of all: if you buy on a credit card, pay the balance off immediately. Don’t wait or delay, pay straight away. That way you’ll avoid interest and charges.

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