Card protection & insurance Section 75
What is credit card protection?
One of the underlying benefits of using a credit card for purchases is the extra protection available to consumers on purchases made using a credit card. Under section 75 of the Consumer Credit Act, 1974, the credit card company is able to cover the cost of an item you bought is lost, stolen, misrepresented or damaged provided that it is within 90 days of the purchase and value of the item is worth between £100 and £30,000.
Credit card protection is especially useful if the company where you bought the product from does not exist anymore and it is not possible to get hold of them. section 75 applies to most credit cards and store cards and is actually not available from debit cards. So its almost like having credit card insurance – you have the piece of mind that if you make a big purchase and something goes wrong with the order that you have this extra protection from your credit card provider.
The exact terms of Section 75
Below is the terms of section 75 of the Consumer Credit Act which confirms your protection:
75. — (1) If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor.
How does card protection of credit cards work?
There are certain cases where section 75 may or may not be applicable. For instance, the value of the total product must exceed £100 so a train ticket costing £99 and another ticket for the way back costing £20 is not eligible for protection under section 75 whereas a return journey costing £119 is eligible. If you have any doubts about your purchase, you should contact your credit provider who should be able to provide you with more information on whether a purchase is protected under section 75.
It is important to note that section 75 does not protect all purchases with a value between £100 and £30,000. Payments made through middlemen such as travel agents are usually not protected by section 75. Purchases made using credit cards indirectly such as using cheques are not protected by section 75.
On the other end of the scale purchases with a value larger then £30,000 do not receive the same type of protection offered by section 75. However, you can look out for certain credit agreements with a value up to £60,260 are covered by section 75a. The main difference between section 75a and section 75 are that a specific loan has to be agreed so general card purchases are not eligible for protection under section 75a. Also in order to benefit from protection offered by section 75a consumers must have been unsuccessful in contacting the retailer before contacting the lender. Credit for land and business use is not covered by section 75a.
Recently there have been many cases of lenders covering the full cost of undelivered and faulty products even if only the deposit was paid for using the card. It is clear that using a credit card can offer consumers an unrivalled level of consumer protection.
Is there card protection from Paypal?
Yes, as long as the company like Paypal or Worldpay has a Commercial Entity Agreement, one is still able to claim under section 75.
How to make a claim?
1. Contact the seller by phone or post
2. If not successful, ask the credit card company for a section 75 form. Fill in the details and send off. Keep a copy of the form for yourself.
3. If still not successful, write to the Financial Ombudsman Service
If you find yourself in a situation where you would like to make a claim for a faulty or an undelivered good using section 75 of the consumer credit act you should start by contacting the retailer. If the retailer does not exist anymore or cannot be contacted then you should contact the credit card or the finance company and ask them to send you a section 75 form. If unhappy with a decision made by the lender or the level of service provided by the lender then you should contact the Financial Ombudsman. This is a free service and is there to protect consumer rights so one should contact them directly if unhappy.
Are purchases made on a debit card protected?
No, section 75 only protects purchases made on credit cards. The extra protection available for purchases made on a credit card can make it a more effective method for financing purchases. You can request a ‘chargeback’, which is not part of section 75 but is recognized by banks and allows goods to be refunded. A chargeback is also applicable for goods purchased by credit cards and are worth under £100.