'Section 75' credit card warning: online payments where you lose your protection

A little known flaw in the Consumer Credit Act may put millions of shoppers at risk of losing their money if things go wrong, an investigation has revealed.

Under Section 75 of the Consumer Credit Act, shoppers who make payments between £100 and £30,000 on a credit card can get their money back if there is an issue with the item or it fails to show up. This is because the law holds the retailer and card company jointly liable.

However, a little known loophole revealed by a MoneySavingExpert investigation means that consumers will only be reimbursed if there is a direct link between the customer, their card provider and the supplier. If the payment is processed by a third-party company then the protections under Section 75 do not apply.

However, the rules are complicated and even the Financial Ombudsman, the resolution service, cannot offer a list of payment platforms where a Section 75 claim would not be considered.

When does Section 75 claim fail?

If you bought a ticket through an agent on a credit card, you may not be able to get your money back using Section 75 if it doesn’t arrive.

This is also the case if you book a holiday through a travel agent. However, the travel industry has its own rules in place to protect consumers.

You may also not be covered for credit card transactions made through online payment platforms, such as PayPal, because it breaks the chain between customer and supplier.  

However, if the firm you’re buying from has a "Commercial Entity Agreement" you’ll be able to make a claim under Section 75 even if you use PayPal.

PayPal has its own Buyer Protection scheme. This covers online purchases made on eBay and other websites if the item does not arrive or match the seller’s description.

Property, vehicles, custom-made items and industrial machinery are among some items that are not guaranteed.

Amazon is another firm where Section 75 may not apply. Shoppers who buy items on a credit card from third-party suppliers on the online marketplace will not be covered. If you buy directly from Amazon then you could make a claim.