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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.

UK Rewards credit and charge cards

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.

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

We looked at this topic a couple of years ago when the Financial Times raised it (article is here behind a paywall).  There is an interesting catch to the Section 75 rules.

Purchases made on supplementary credit cards are usually not covered by Section 75

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.

Here is a case study

Since I last looked at this, I came across a case study on this topic.  It is in the newletter of the Financial Ombudsman Service (PDF), which is about as definitive as you can get.  Here it is:

Mrs L negotiated with a land-holding company to buy a plot of land. She said she agreed to buy the land on the basis of a spoken assurance from the company that she would be able to obtain planning permission for the plot.

After completing the purchase, Mrs L discovered from the local authority that she was unlikely ever to get planning permission to develop the land. As she had used a credit card to pay the deposit, Mrs L considered that the credit card provider was liable to her under Section 75 for the cost of what she now considered to be ‘worthless’ land. However, the card provider disagreed, so Mrs L brought the case to us.

Complaint rejected:

Mrs L had bought the land in her sole name, intending to develop it as her own project. But she had paid the deposit by using a credit card account in her husband’s sole name. Even though her husband had allowed her to have an additional card (carrying her own name) on the account – the account itself was in Mr L’s name and it was Mr L – not his wife – who had had been provided with credit.

Because of that, the linked ‘chain’ of lender, borrower and supplier required for Section 75 to operate was not present, so we could not uphold Mrs L’s claim against the credit card provider.

Purchases made for a third party by the main cardholder are not covered under Section 75

Here is another quirk to be aware of, although most of the time this wouldn’t matter.  If you buy a sofa for your Mum on your main card 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.

Using the same logic, you CAN be covered for some supplementary card transactions

The logic over who ‘the purchaser’ actually is means that some supplementary card transactions ARE covered under Section 75 as long as the main cardholder benefits from them in some way.

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 of you, it should be covered.

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. 

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, some people who won’t use Curve or PayPal because they want 100% legal certainty of being paid back.  If you are one of those people, you should also ensure that you aren’t charging big purchases to a supplementary card unless the main cardholder is a ‘beneficiary’ of the purchase.

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Comments (44)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Dubs says:

    A caveat, American express voluntary scheme for charge back on charge cards is only 120 days, as I found out after having a problem with a new laptop at 170 days of ownership.

  • Doc says:

    Interesting article with quirks I was never aware of. Thanks Rob.

  • Andrew says:

    It’s a bit bold to say you “shouldn’t lose out” with PayPal and Curve’s voluntary schemes. Can you honestly see Curve siding with the purchaser in a £30,000 claim?

    • memesweeper says:

      Curve claim limit is £100,000, but it’s not insurance backed, and like Amex is 120 day claim limited.

    • BuildBackBetter says:

      +1. PayPal’s protection is useless. They just find a reason to side with the seller as the seller pays fees.

      • Brian W says:

        I’ve won a case recently with PayPal’s buyer protection for a purchase that was not as described. I was awarded 100% refund + postage paid so I’m not sure you’re right there.

        Is your post based on your own experience only, or do you have another source showing it’s useless for all?

      • kitten says:

        that’s the general feedback

        in fact ebay (where Paypal started) can tolerate the odd dodgy seller too. I really try never to give bad feedback on ebay though – sooner none.

  • plunet says:

    Although the charge cards are under the voluntary scheme, I assume Amex Credit cards would have full section 75 coverage.

    @Dubs I would assume that 120 days would be from the point the contract is fulfilled. If it’s not fulfilled then the 120 days cannot start. I have heard for travel and events there might be a longer time limit, maybe 540 days (I think this was for debit card chargeback)..

    • Bs says:

      Yes Amex credit cards have full S75 protection. I have claimed several times now for replacement flights when the original flights were cancelled, and the original operating airline would only refund not offer to reroute me.

    • Dubs says:

      Yes 120 days from the point of fulfillment/ delivery, which to my amusement is less than the 180 days of the consumer rights act for replacement/repair or refund after one of those option. From experience flights are covered if cancelled because as you say contract fulfillment has not been met.

  • Andrew (@andrewseftel) says:

    A bit technical, but to correct the first bolded sentence, the creditor is only liable for breaches of contract. There is no obligation to perform if the merchant is getting on with it.

    Also worth a reminder that this is not a peculiar protection of credit cards, it covers all CCA-regulated lending, e.g. point of sale finance.

    • Bs says:

      Would s75 cover a klarna buy now pay later agreement?

      • Andrew (@andrewseftel) says:

        Yes, Klarna BNPL is a regulated agreement under the Consumer Credit Act. See section 18 of the Klarna terms. If in doubt, the terms of the credit agreement usually mention CCA in the first few lines.

        • Harrier25 says:

          I don’t think s75 covers Klarna BNPL purchases. Surely these would work the same as using PayPal and you’d need to use Klarna’s own voluntary claim back protection?

  • Sunil says:

    Also worth adding that you won’t be covered if purchasing through a travel agent or online booking site, as “the linked ‘chain’ of lender, borrower and supplier required” is broken by the travel agent being between the purchaser and the airline/hotel etc

    • Bagoly says:

      Is that really the case?
      There is a chain Customer-Travel_Agent-Lender.
      I would think that your claim is against the Travel Agent.
      The fact that they have a claim against the airline does not affect your claim against them.

      • MKB says:

        Here’s my experience:

        Travel on Etihad booked using American Airlines points with the cash element paid using an Amex credit card.
        Tickets issued on 001 (i.e. AA) ticket stock.
        Financial Ombudsman said customer-supplier chsin had been broken , and rejected my S75 claim.
        He said that the use of 001 tickets did not provide any evidence that AA was the supplier and that Etihad was a sub-contractor, as I had argued.

        • kitten says:

          Who took the cash element? for me that’s who the contract is with. Think I’d have sued credit card, Etihad, AA, any sub-company used to issue miles tickets by AA, all as co-defendants and ask the court to sort out who’s liable. Because someone must be.

      • Sunil says:

        The travel agent has done their bit, they’ve purchased you a ticket, that is the service they are offering and they have fulfilled their contract. The airline in this example are the ones in breach, and the chain is broken up to the airline. At least that has been my experience having just tried a claim in this scenario and been rejected.

  • jil says:

    Used Curve’s protection once, for a few thousands pounds kitchen appliances bought on Currys but never delivered, argued with Currys for over 1 month not going anywhere, it’s a nightmare, then went to Curve, got my money back smoothly, and then my Currys account is blocked, I guess in the background the card issuer can claw money back from retailer?

    • kitten says:

      Yes. Card issuer will have bigger lawyers than you and that’s why this bit of legislation is good. Cardco will be recovering in a decent number of cases.

  • Amy says:

    Doesnt Section 75 cover you for 6 years (not 120 days)

    • Bs says:

      Yes. Only the official S75, not any alternative chargeback arrangements.

    • Andrew (@andrewseftel) says:

      Nothing to do with S75 really, it’s a statute of limitations issue. Limitation Act 1980 for England and Wales, I think. At this point, you have no claim against the merchant either.

      NB it’s five years in Scotland, not sure about NI.

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