Guide to credit and debit card protection

Legal protection for credit and debit card payments

Credit card payment protection

When you make a payment between £100 and £30,000 with a credit card, you’re covered by Section 75 of the Consumer Credit Act. This means that if there’s an issue with the product you’ve bought or the company you’ve bought from goes into administration, the credit card company has equal responsibility to make sure you’re not left out of pocket.

You can usually claim to get your money back when a company hasn’t delivered goods or services, or if they’ve misrepresented what they’re selling.

Debit card payment protection

You don’t get protection from Section 75 if you buy goods on a debit card – this is because they are not part of a credit agreement. However, you might be able to make a claim for a refund under Chargeback, which we cover in a section below.

The Chargeback scheme covers purchases made using all UK debit cards, including Visa and Visa Electron cards, MasterCard debit cards, Maestro debit cards and prepaid cards.

Minimum payments and credit card protection

In order to be protected by Section 75, you need to spend £100 or over. However, there’s a slight catch; the £100 minimum amount applies to each single item you buy – not the total cost of the goods.

For example, if you bought a shirt and a jacket which weren’t part of a full suit, and each item cost £95, you wouldn’t be protected by Section 75. However, you would be protected if you bought a whole suit as a single item which cost £100.

The same rule applies if you buy concert, festival or airline tickets – with the exception of family tickets, which are grouped as one item, unless you spend £100 on each single item you won’t be covered.

How can you claim money back if you’ve spent less than £100, or spent money on a debit card?

You may be able to claim your money back by claiming against your credit card company using a voluntary scheme called Chargeback – this is a non-legally binding agreement Visa, Mastercard, Maestro and American Express have signed up to.

Chargeback works by the credit card company trying to claim your money back from the company you’ve paid by reversing the transaction. However, there’s a time limit to make a claim – usually 45 or 120 days from making the purchase – and the exact rules for Chargeback schemes vary by card provider, so you should make sure you know your debit card's Chargeback rules.

It can also take a while to process your refund as the credit card company has to get the money refunded before it can pass it onto you.

To claim through Chargeback, you’ll need to contact your bank and ask them to start the Chargeback process. Your bank will then investigate the matter and if the matter is sorted out, they will refund your money.

If your Chargeback claim fails, you can take your case to the Financial Ombudsman Service within six months of being told your claim has been unsuccessful.

Are PayPal purchases protected by Chargeback?

No – you’re unlikely to be protected under debit card Chargeback schemes for items purchased using PayPal. PayPal runs its own protection scheme which offers some cover, but it’s an in-house scheme which isn’t protected by law.

How to claim money back on credit cards

If there’s an issue with a product or service you’ve bought with a credit card, your first step is to contact the company you bought the goods from to see if they’ll help you with a refund.

If they fail to help you or the company’s gone into administration, you can make a claim against your credit card company.

  • Write to the credit card company, telling them what you bought, where and when you bought it and how much you paid.
  • Photograph or photocopy receipts and include copies if you have them.
  • If you don’t have receipts, you will need to find another proof of purchase – check your email for confirmation messages.
  • Tell your credit card company that you’ve been in contact with the company who initially sold you the goods and what they’ve said back to you – if they’ve said anything at all.
  • Explain what you’d like the credit card company to do, which will usually be to refund the money into your credit card account.
  • Include the phrase, ‘I am making a claim under Section 75 of the Consumer Credit Act’.
  • Keep records of letters or emails you’ve sent.

Protecting a deposit paid for with a credit card

If you’re paying for a deposit for a hotel or event, you don’t need to spend £100 to get Section 75 protection. For example, if you put a deposit down for an event which cost £150 but the deposit was £20, you’d still be covered, and be able to claim the full £150 back if the event was cancelled.

You don’t need to pay the full price as paying a deposit is enough to get you the legal protection.

Claiming back on a holiday paid for with a credit card

If you’ve booked a holiday or flights costing between £100 and £30,000 and paid either a deposit or the full price on your credit card, you may be able to make a claim if the airline or travel company goes into administration, or the holiday is very different to what was described.

Here’s what’s covered by Section 75 if your holiday goes wrong:

  • The cost of your flights if the airline goes under
  • The cost of your holiday if the travel company stops trading
  • Additional expenses or consequential loss – e.g. if you had to stay on for a few extra days in a hotel because your flights were cancelled

What isn’t covered?

  • If you buy a ‘flight only’ trip from a travel agent, you might not be able to make a claim because the third party was only contracted to provide the tickets and not the flight.
  • Additional costs, such as staying on holiday for an extra three weeks after your airline went bust, and you’d been offered alternate flights home a few days after your airline stopped trading.

Claiming money back if you’re a second cardholder

Things can get a bit trickier if the purchase is made by a second cardholder. All claims have to be made by the main cardholder – the person who originally signed the credit agreement.

If you need to make a big purchase and you’re an additional cardholder, it's a good idea to get the main cardholder to buy the item, rather than using the card yourself.

This doesn’t mean that purchases made by a secondary cardholder won’t be covered, but if you want to be sure that Section 75 will definitely protect you, ask the main cardholder to make the purchase.

However, if the secondary cardholder a) buys something with the main cardholder’s agreement and b) the main cardholder will benefit from it (e.g. a family holiday or a gift), your purchase should still be covered under Section 75.

Check with your card issuer to see what their rules and regulations stipulate when it comes to second cardholders.

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