If you pay for
goods or services by credit or debit card or by a prepaid card you have clear rights
to get your money back if anything goes wrong. So it is always safer to pay by
plastic and you should always do so if you can. With a credit card you have two
separate rights.
Legal right
If you pay
by credit card for an item which costs more than £100 and up to £30,000 then
the credit card provider has a joint legal liability with the retailer for the
goods or services you buy. If the product or service goes wrong you can
claim the full cost back from the credit card provider.
For example,
you pay for a holiday or flight and the firm goes bust. Or you buy clothes
online and they do not arrive. Or you purchase an electronic device which stops
working after a week. Or you pay for an online service which is a fraud. In all
those cases you can use your legal right to get your money back from your
credit card provider.
The legal right covers purchases made anywhere in the world – whether
you are buying in person abroad, or you pay online or by phone.
It is called
your ‘section 75’ (or s.75) right because it comes from that section of the
Consumer Credit Act 1974.
Of course,
it is usually best to go first to the retailer or supplier to get your money
back. But if they refuse or have disappeared or gone bust then the credit card provider
must refund the whole cost.
Even if you
just pay for part of the purchase on a credit card and the rest in some other
way s.75 covers you for the whole purchase price if that falls within the
limits. So if you buy a £750 sofa and pay a 10% deposit of £75 on a credit card
and then you pay the balance in cash, you can claim a refund of the whole
amount from your credit card provider if the sofa doesn’t arrive or is faulty.
There is no
time limit on making a s.75 claim but it is always best to make a claim as soon
as possible. If the purchase was more than six years ago you may find it more
difficult as that is the normal limit on legal claims.
Section 75
rights apply to every credit card – Visa, MasterCard, or American Express
(credit cards but not its charge cards).
Contract right
If you pay
by debit card, credit card, or prepaid card you have a separate right to get
your money back called chargeback. It is part of the contract between Visa, MasterCard,
or American Express and the bank or firm that provides the card. Chargeback generally
has no upper or lower limits, but MasterCard won’t consider claims for items
that cost less than £10. Chargeback is most useful for plastic card purchases
not covered by s.75. It does not apply to American Express charge cards but American
Express credit cards are covered by it (and, of course, they are covered by s.75).
Chargeback
covers the same problems as s.75 – goods that are defective, do not arrive, are
fraudulent, or where the firm goes bust.
There are
time limits for claiming which are quite complex. Normally you have to claim
within 120 days – about four months – of realising something has gone wrong.
But there is also an absolute time limit of 540 days which is about 18 months. So
claim as soon as you know something has gone wrong.
The
chargeback procedure involves your bank going to the bank of the supplier and
trying to recover money from them. The supplier’s bank will then ask the supplier to provide the money. If the supplier refuses then its bank has to refund you if you have a valid calim. Some guides and some banks suggest it depends on the firm you paid agreeing to refund their bank. That is not true. If can only refuse to pay if it believes that you do not have a valid claim. If you insist you do then it goes to a dispute procedure with Visa, MasterCard, or American Express. The card network's decision is final. If it upholds your claim then the suppliers bank has to pay. It is part of its contract with the netork and if it refuses then it will - or should - lose the ability to use Visa, MasterCard, or American Express. Although it is not a right under a legal
provision, it is an absolute right guaranteed by Visa, MasterCard, or American
Express and their contracts with the card providers. If your claim is valid the supplier's bank must pay up.
Many banks
and card providers misunderstand chargeback and frontline staff may well say
that you cannot recover your money or they must wait for the provider to refund
them. If the product has failed or not arrived they are wrong. But if you ultimately lose and the network says your claim is not valid you may have to give the money back.
How to claim
Write to
your bank or card provider setting out the details of what has happened and say
you are claiming a full refund under s.75 of the Consumer Credit Act or under
the chargeback procedure. In your initial letter always say that if you do not
get a satisfactory response within eight weeks you will take the claim to the
Financial Ombudsman Service. That tends to concentrate the mind. If the claim
is refused or not resolved within eight weeks then do take it to the FinancialOmbudsman Service.
Normally a claim to the Ombudsman costs the financial firm £550. It is free to
you. The Ombudsman upholds most of the claims that reach it. You must go to the
Ombudsman within six months after receiving a final refusal from the card
provider.
Not covered
Section 75
and chargeback apply when the item you purchased is faulty, goes wrong, doesn’t
turn up, or was fraudulent. They do not apply if you change your mind. However,
if you buy online or over the phone you have an absolute right to reject the
item as long as you tell the supplier within 14 days.
Version 2.0
20 July 2020
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