What to do when all else fails – what is Section 75 consumer protection?

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Two suitcases packed for holiday

As many of us consider holiday plans for the coming year it is also worth considering how to protect your holiday purchases so that you are in the best financial position should things go wrong. Many may still be concerned about changes to holiday plans as a result of Covid-19 particularly as eligibility for booster vaccines is opened up and mainland Europe is seeing a fourth wave strike with ferocity.

This form of financial protection is also important if a company you have made a booking with goes under, sadly a not uncommon occurrence over the last year.

What does Section 75 Consumer Credit Act protection give you?

You may have heard reference in the past to Section 75 protection and not been quite clear as to what it means. This is an important aspect of consumer protection that everyone should be aware of.

The piece of legislation is entitled the Consumer Credit Act 1974 (CCA) and the relevant section is Section 75. It is quite a mouthful so is helpfully referred to simply as Section or S.75.

Many consumer protection sites have compiled detailed easy to follow information sheets as to how Section 75 works.

Here is a summary of the key points that you should be aware of in case the need arises:

  • Under S.75 of the CCA a credit card company is jointly and severally liable or responsible for any breach of contract or misrepresentation by a retailer or trader.
  • In order to access the benefits under Section 75 the goods or service in question must have cost over £100 and not more than £30,000.
  • You don’t have to have paid the entire amount on your credit card to avail of the protection offered. This is an important point to remember. For instance, you may only pay an element of the cost, such as the deposit, on your credit card but you are still entitled to the full financial protection offered by S. 75.
  • This is important to remember if the cost of the holiday booking is significant and you are perhaps planning to make a payment by bank transfer.
  • If you for example purchase flights directly from a supplier and they go bust then you could look to your credit card company to refund the amount to you.
  • Debit cards and pre paid cards do not attract the same protection and you may need to consider whether a chargeback is more appropriate in those circumstances.

Exceptions to Section 75 protection

As ever there are exceptions to every rule and below are some examples that may be relevant for holiday related purchases:

  • If you purchase multiple items each of which are under £100 but combined exceed £100 the protection will not apply;
  • The protection can apply to purchases you make abroad;
  • Payment must be made directly to the supplier of the goods or service. If you make payment to an agent or third party, the protection will not apply.
  • Payments through PayPal are treated differently and you should check how such payments are made
  • Cash withdrawals using your credit card to make a purchase will not be covered by the protection.
  • Currently, further to guidance from the Ombudsman, purchases by an additional cardholder must benefit the primary cardholder in order for the protection to apply. This is a slightly grey area and if the amount in question is significant and you have any concerns at all it may be worth the primary cardholder making the qualifying purchase themselves on their card.

It is also worth noting that making payment via Klarna, Clearpay or Laybuy will not result in the S 75 protection being afforded to you as the link required is broken.

As ever, in order make any claim as easy as possible, keep your receipts and statements. This should be relatively easy to do as many receipts are now electronic as are credit card statements.

How to make a claim

If you have been unable to reach a settlement with the relevant party then contact your credit card company and find out how to make a claim. Procedures vary from card provider and they should have information on their websites on the steps to follow.

If you experience issues with your credit card company dealing with your request under S.75 you can always approach the Financial Ombudsman and make a complaint.

Goods and services bought with credit: section 75 (financial-ombudsman.org.uk)

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