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Do you have Section 75 chargeback rights as a supplementary credit card holder?

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If you read the Head for Points comments section, you will know that ‘Section 75’ coverage often comes up when discussing payment aggregators such as Curve.

‘Section 75’ is the UK law which makes a credit card company jointly liable with the retailer for anything you buy, as long as you spend over £100 and under £30,000.  (You can charge as little as £1 to a credit card to get the coverage, but the total purchase must be over £100.)  You can claim up to six years after the original purchase.

If the retailer goes bust or the product is faulty and the retailer shuns your refund request, you can go to your credit card company and ask for a refund.  It is one of the most consumer friendly pieces of legislation around.  I’m never sure if the credit card companies are pleased it exists, but it is a great advertisement for using a credit card instead of cash or a debit card for major purchases.

Of course, you can easily not be covered by this rule, but it doesn’t matter much:

American Express charge cards are not covered – neither would the Lufthansa Miles & More Diners Club / pre-paid Mastercard cards – because they are not credit cards.  Both run their own voluntary schemes, however, which give equivalent cover.  Technically these voluntarily schemes are not as good, because they do not have the law behind them, but in reality you will be fine.

Any purchases you make via Curve Card, PayPal or similar products are not covered.  This is because the contract chain goes ‘you / Curve or PayPal / underlying credit card / retailer’ so there is no direct contract for that particular purchase between you and the credit card company.  Again, Curve and PayPal have their own voluntarily schemes so you shouldn’t lose out.

Do you get Section 75 coverage on supplementary credit cards?

But if you pay directly with a credit card you’re fine ….. aren’t you?

A report in the Financial Times this week (article is here behind a paywall) suggests not.  There is an interesting catch to the Section 75 rules.

Purchases made on supplementary credit cards are not covered by Section 75 if the main cardholder is not a beneficiary.

If your partner has a supplementary credit card on your account, and they make a purchase with it for themselves, you do NOT automatically get refunded if the retailer goes out of business.  This is because the credit card contract is only with the main cardholder.

On the other hand, if your partner used a supplementary card to book a holiday for both of you then you ARE covered, because the main cardholder is a beneficiary.  Similarly, if your partner bought a present for someone which was to be a gift from both you, it should be covered.

Similarly …. purchases made for a third party by the main cardholder are not covered under Section 75.

Most of the time this wouldn’t matter.  If you buy a sofa for your Mum and it is never delivered to her due to bankruptcy, the credit card company is unlikely to find out that it wasn’t for you.  However, if you book a flight or hotel for someone else then the paperwork will clearly show that you are not the traveller and coverage could be refused.

I know that many HFP readers offer to put purchases for friends and family through their cards.  This could be to help them hit spending targets for a bonus or to benefit from, say, double points on airline purchases on Amex Gold.  This may not always be sensible.

This is what Which? has to say on the matter:

Additional cardholders

If somebody else such as your partner has a credit card and has added you as an additional cardholder, it’s usually best to get the main cardholder to make any big purchases, rather than using the extra card yourself.

This doesn’t mean that purchases made by a secondary card holder will never be covered, but it’s best for the primary card holder to make larger purchases if you want to be sure of protection under Section 75.

If, however, the purchase is made with the primary card holder’s authority and if they expressly request the purchase and will benefit from it – a family holiday, for instance – they will still be covered under Section 75. 

Technically, you are probably better off with an American Express charge card supplementary card than a credit card supplementary card.  All Amex claims, whether from the primary or secondary cardholder, are dealt with under their voluntary code so there should be no difference in whether or not you get repaid.  A credit card company could choose to act under the letter of the law and not cover supplementary cards.

For clarity …. I wouldn’t get too paranoid about this.  Realistically, however you pay, you are likely to be reimbursed under a voluntarily scheme even if Section 75 fails.

However, if you are one of those people who won’t use Curve or PayPal because they want 100% legal certainty of being paid back, you should also ensure that you aren’t charging big purchases to a supplementary card.

Thanks to Andrew for his help with this.

(Want to earn more miles and points from credit cards?  Click here to visit our dedicated airline and hotel travel credit cards page or use the ‘Credit Cards Update’ link in the menu bar at the top of the page.)

Comments (58)

  • Paul Stevens says:

    This was a while ago now and I’m over it but would like to see if people here could have done something different.
    Was looking at a flight in New Zealand. There were two flights on the day I needed to go. Flight A was direct and cost £1000 (numbers are just illustrative), flight B had a stop over which made the overall flight a lot longer obviously but cost £500. I went for flight A because you only live once.
    Six months later flight A is cancelled. I am offered my money back or a move to flight B. Flight B now costs £1100. I had to accept the move to flight B.
    I see this as the airline ripping me off £500. I brought this up several times but of course got nowhere.
    The flight was booked on my BA amex. Is there anything I could have done in this case?

    • Andrew says:

      The only possible argument would be that the new indirect routing is not ‘comparable conditions’ to your original direct flight. If so the airline and/or credit card company would be responsible to putting you on a direct flight from another airline (if one exists).

      I think you’re probably going to struggle with that argument though and the best you could hope for is some sort of good will gesture from the airline.

      • Alex M says:

        In my view airlines goodwill went to zero since the EC261 has been introduced.

    • Lady London says:

      How far ahead was jour chosen Flight cancelled? If less than 14 days you have dôme good rights under EU261.

      If more than 14 days ahead then i would definitely say the substitue flight offered is not under comparable conditions.

      Which airline are we talking about?

      • Andrew says:

        Since this was a flight in New Zealans EU261 will not apply.

        • Lady London says:

          I interpreted “in” as “to”.
          Would be pretty hard to imagine, surely, an internal flight in New Zealand costing £1000?

          • Callum says:

            They say that it’s illustrative. There are also not any non-stop flights from Europe to New Zealand and FAR more than two route options per day (try several hundred!).

            In regards to compensation, it would be good if they were forced to record what alternative routes would have cost at the time and refund to (at least) that level. Without that law though, I’m not sure what compensation they would be legally entitled to. A full refund or a reroute is it I would imagine. EU261 has definitely spoiled us – don’t count on anything like that anywhere else!

    • Shoestring says:

      Hang on, if I read your post correctly, you got the re-route ticket at no extra cost to yourself, ie you paid £1000 originally and got the new ticket in a ‘free’ re-ticketing, (despite the new ticket now costing £1100 on the open market).

      How is that getting ripped off?

      • Lady London says:

        Because he initially only chose a more expensive ticket, as the prices were when he bought, in order to AVOID a stopover.

        Now he’s got stuck with the stopover anyway. which was always worth less to him.

        makes sense to me.

  • qwertyknowsbest says:

    Be aware also of online purchases through an intermediary that you have no say in using. I had this issue with an item bought direct from Samsung, had multiple faults, gave up chasing Samsung and claimed from Amex. They promptly rejected with a standard letter and would not consider further.

    Link below explains.

    https://www.moneysavingexpert.com/news/2017/04/revealed-section-75-credit-card-protection-may-fail-due-to-payment-processing-loophole—shoppers-beware/

    • Lady London says:

      This needs to be tested in court. Where the buyer is forced through a 3rd Party processor without being able to choose then for s75 purposes there should be law that says the contract needs to be treated as though it had been made directly with the seller.

      I wonder if Sale Of Goods Act (or whatever the new version of that is called) provision would still apply.

      Personally I’d sue both the seller and the payment processor under both of these and let the court sort out who is liable for what.

    • Jonathan says:

      I purchased something from a website via PayPal. PayPal support were absolutely useless when it went belly up whilst Amex refunded me the money albeit taking 2-3 months.

  • the_real_a says:

    Its also worth pointing out that most AMEX cards come with Retailer refund protection. This is AXA insurance that i’m pretty sure i`m the only person in the country to claim on. In short any product over £25 to £200 will be refunded if the retailer refuses for ANY REASON to take it back within 90 days. They ask you to send the product to the underwriters or have allowed me to donate to charity and send them a receipt. Niche of course and not great for larger purchases but the protection is there.

  • Aston says:

    Sorry off topic.
    If I cancel my amex gold, will I lose my free lounge pass access? Currently unused.
    Thanks

    • TokyoFan says:

      Yes, with immediate effect.

      • Shoestring says:

        Yep & you lose the ability to pay to get into lounges for £20 once the free passes have been used up – this can be handy at times. OK when you are still on a free Gold card, probably not when you’re paying the £140.

  • Michael says:

    Do you still have protection once the card has been cancelled?

  • ysun92 says:

    I found Curve has super bad chargeback capabilities. Whatever the merchant responds would be accepted by Curve and then you lose. I now only use Curve for MS.

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