Finance experts TotallyMoney are advising people that if they need to make large purchases, they should do so with their credit card, to protect their finances during the coronavirus crisis.
- Section 75 of the Consumer Credit Act makes both credit card lenders and retailers responsible for when a service or product between £100 and £30,000 isn’t delivered
- Retailers such as Debenhams and Laura Ashley have gone into administration, causing doubt for shoppers, as well as the collapse of Thomas Cook and Flybe in the past year
- Alarmingly, nearly a third (29%) don’t realise Section 75 covers them for credit card purchases
- Over three in ten (34%) don’t know that PayPal transactions aren’t protected
With many retailers and services struggling due to coronavirus, customers are being warned to protect themselves if the company collapses or can’t deliver the service or product.
When you can use Section 75
If consumers bought an item and it doesn’t arrive due to the company filing for administration or failing to deliver, this can be refunded. For example, if someone bought a sofa on their credit card but it was never received, this is covered.
Even if customers only use their credit card for partial payment, they can still claim back a refund. That means if the sofa was £400 but an initial £50 payment was made on a card, a full refund is still available.
Faulty or damaged goods are also protected. If a mobile phone is bought online and it arrives with a cracked screen, Section 75 covers this too.
As well as goods, cancelled holidays and events are also protected by the act. Plus, any additional expenses that may have been booked for an event. For example, accommodation or train tickets to a festival.
Breaking the chain
Any payment made on a credit card between £100 and £30,000 is covered under Section 75, providing the link between the customer, the credit card company, and the service provider hasn’t been broken.
This means that purchases made through third parties, such as PayPal or a travel agent, aren’t protected under Section 75.
However, using your credit card for a contactless payment, including on a digital wallet such as Apple Pay, doesn’t break the chain. In this situation, you’re still directly using the credit card to make the purchase. That means customers using contactless payment for part of a purchase over £100 are protected.
Alastair Douglas, CEO of finance experts TotallyMoney, comments:
“It’s important to be aware of Section 75, not just for previous purchases made, but also to protect yourself in future.
“At the moment, many companies are struggling and unfortunately, some might not make it through this crisis. Customers should make sure they’re protected in the event this happens, by making large payments on a credit card.
“This allows people to rest assured they won’t be left out of pocket, especially at a time when many people are struggling to make ends meet.
“Before applying for any credit card, it’s important to check your eligibility. This shows you how likely you are to be accepted, so you can find and apply for a card you have a higher chance of being accepted for. This can also help to protect your credit score, and reduce the need to make multiple applications.
“At TotallyMoney, we’re on a mission to improve the UK’s credit score and help people move on up to a better future. Section 75 is always a good way to protect your finances, but particularly right now, when many people can’t afford to lose out on money if something should go wrong.”
Section 75 Top 10 Tips
To protect your purchases, here’s all the information you need about Section 75.
1. Limits on claims
Individual items and purchases costing more than £100 and up to £30,000 are covered under Section 75. So, whether it’s a cancelled holiday, or piece of furniture that never arrived, it’ll be covered.
2. Pay a deposit, get full value cover
When a deposit for goods or services is required, use a credit card — even when the deposit is less than £100. Should anything prevent you from settling the balance (like the company goes bust or the seller vanishes), Section 75 lets you claim the full amount. Not just the paid deposit.
3. We’re talking credit, not debit
Section 75 doesn’t cover anything bought using a debit card. Chargeback protection is as good as you’ll get with debit.
4. They’re bust. You’re not broke
Buying from a company that goes bust before they deliver doesn’t mean your money’s lost. Section 75 requires credit card companies to get your money back.
5. Pay part credit and part cheque, get full value cover
The same goes if you decide to pay part of the balance by credit card and the rest by cheque. Consumers can reclaim the full value of the qualifying goods and services even if the total balance wasn’t paid using a credit card.
6. Stay protected on closed cards
Say you buy an item, close the credit card you bought it with, but something goes wrong with the qualifying goods or services, Section 75 means you can still make a claim.
7. Extra expense cover
If you book a holiday and the flight is cancelled, through Section 75 you could claim back additional accommodation and food expenses, providing those consequential losses were reasonable.
8. Section 75 loopholes
Buying through a third party (like online marketplaces or travel agents), additional cardholder purchases, or cash that’s withdrawn from your credit card account won’t offer Section 75 protection. You need to have paid the company directly (so purchases made through PayPal, for example, aren’t covered).
9. Section 75 applies to all credit cards
When it comes to Section 75 there’s not one rule for one credit card company and something different for another. All credit cards come with Section 75 benefits.
10. The claim process
First port of call: the retailer you bought the goods or services from. Failing that, go to the credit card company — this might be your bank or building society, not Visa, Mastercard or AMEX. They’ll get you to fill out a claim form and your money will be refunded.