It’s frustrating when you buy something that’s faulty. Even worse is when you book your dream holiday and later learn the company’s gone bust. What next?
What are your rights as a credit card user – and can you get a refund? Well, let’s explore your options.
Credit card vs debit card
You might not realise it, but buying with your credit card provides an added layer of protection. If what you buy isn’t delivered, develops a fault, or the company selling it goes under and can’t provide it, you could be entitled to a refund under Section 75.
This is a key advantage of shopping using your credit card. You don’t get this added protection using your debit card.
Of course, there are rules you’ll need to know before you look to make a claim.
What is Section 75?
Section 75 is part of the Consumer Credit Act 1974, and means that your lender is equally responsible with the company you buy from for refunding you.
To be protected under Section 75, your purchase must cost more than £100 and less than £30k. Let’s explore this in more detail.
How does it work?
So, let’s say what you buy is worth more than £100, will you be covered? Yes – but it’s not as simple as it may sound. For example, if you bought a pair of shoes for £110 and they developed a fault, you would be covered under Section 75 and the lender would be responsible for refunding you if the seller didn’t.
However, if you bought two pairs of shoes at the same time at £80 each, you wouldn’t be covered, unless you bought both pairs under a promotional deal such as a ‘buy-one-get-one half price’ offer. In this case, you would be covered. This is because the two pairs of shoes would be classed as a single purchase worth more than £100.
In the same respect, let’s say you paid for a holiday. If the total cost of the trip was £140 but you booked everything separately (the hotel costing £90 and flights costing £50, for example), you wouldn’t be covered by Section 75. This is because each individual purchase is less than £100.
However, if you book a package holiday you are covered, providing the deposit you pay is more than £100. This is because the trip is classed as one purchase. You should bear this in mind when planning how you’ll pay for your break, especially with the recent collapse of Lowcostholidays.
And remember, you don’t have to pay the full amount using your credit card. You could just put the deposit on your credit card and use your debit card to pay the remaining amount off. You’ll still be covered as long as your deposit is worth over £100.
You should contact your credit card provider and tell them what’s happened. They will advise you what you need to do next. It may be that you’ll need to send in proof that the item is faulty, for example. It will ultimately depend on the circumstances.
If the vendor you made the purchase from is still trading, the lender will probably ask if you’ve tried to get a refund from them first. You can’t get a refund from both.
But if the company has gone into liquidation, it’s simple - your lender is liable to refund you the full amount.
If you’re turned down and can’t get a refund for whatever reason, you’re more than within your rights to contact the Financial Ombudsman, which will look at your complaint. You can find out more here.
If you know you can comfortably pay back what you owe, using a credit card may be the safest way to pay for expensive items, particularly if you’re buying online or booking a holiday. By doing this, if the item turns out to be faulty or the seller goes under, you don’t have to worry - Section 75 should have you covered.
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