James Walker: You’re only covered when you play your cards right

With firms going bust left, right and centre and uncertain times ahead, you’d be forgiven for wondering if there’s anything you can do to safeguard the things you spend your money on. Well, if you’ve paid for goods or services on a credit card and something goes wrong, you’ve got more rights than you think. There’ a great bit of legislation called the Consumer Credit Act that can help you get your cash back.

Online deals are more complex when it comes to section 75 claims

Here’s how it works

There are loads of ways to pay for things when you go shopping. But paying for goods or services with a credit card means that you can ask the card provider to give you a refund if the goods or services you’ve paid for don’t turn up or are “misrepresented” (in other words, what you’ve been sold isn’t what you were told it would be).

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These claims are made under what’s known as “section 75” of the Consumer Credit Act. In theory, you can make a claim if the seller goes bust, or if you’ve only partially paid for the goods on a credit card.

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 by the card provider.

How do I know if I’ve got rights under section 75?

If you pay for goods or services on a credit card that cost between £100 and £30,000, the credit card provider is jointly responsible, along with the supplier of the goods or services, for any breach of contract or misrepresentation. This can involve goods not turning up, items that are damaged or don’t do what they are supposed to do or situations where you’ve been misled by the supplier. You don’t need to complain directly to the supplier either – but we strongly recommend you do.

You’re even covered if you’ve only paid for a deposit for something on your credit card – as long as the deposit cost between £100 and £30,000. In cases like this you’re still covered for the whole value of the item in question. So if you pay a £200 deposit for a sofa that costs £2,000 on your credit card and the rest in cash, if the firm goes into liquidation the card provider would in theory have to pay you the full £2,000. In fact, the wording around deposits is pretty unclear, so in theory, even if you’d paid a pound on deposit you might be covered, but it’s likely a card provider would fight any claim on a deposit under £100.

Buying through third parties

The issue that catches most people out with section 75 claims is this: you have to buy direct. Many online retailers don’t actually provide the goods or services themselves. So, for example, if you use an online holiday booking firm to buy a flight and a hotel, you’re not buying direct from the provider of the goods or services. So chances are you’re not covered. The simple answer? Use these sites to find the deals you like then buy direct if you can or ask the provider of goods or services to match the price.

Seems simple? Well, what if you buy from a third-party ticket agency that is the appointed “seller” of the tickets for the venue or artist? In theory, you should be covered. But in practice, you might not be as it’s still a third party. The same problem can arise by using your credit card through money transfer services like PayPal. So if in doubt, buy direct.