Does section 75 protect additional cardholders?

Does it matter whether you're the main credit card holder or an additional user when it comes to being protected under section 75?

To make sure that purchases are covered under Section 75 legislation, it's recommended that larger purchases are made by the main cardholder.

Several credit card companies have made the case that section 75 of the Consumer Credit Act 1974 does not apply if a purchase made on an additional card does not benefit the main cardholder.

The Financial Ombudsman provides the example of a woman who purchased some land on her husband's credit card. Despite assurance from the landholders that the plot was buildable on, she was in fact refused planning permission to develop it.

As she had paid by credit card she sought compensation from the card company under Section 75 for the (what she deemed) "worthless land". The card provider in turn refused to pay out and the case went to the Financial Ombudsman.

They also rejected her claim because although she had bought the land in her sole name and intended to develop it herself the card she used to pay for it was for an account in her husband's sole name.

Even though her husband had allowed her to have an additional card in her own name on the account, the account itself was in his name and set up to provide him credit.

Chain of purchase

For section 75 to apply, there has to be a strong 'chain' when you make a purchase: lender to borrower/buyer and borrower/buyer to supplier.

In the above example, the chain was broken because the borrower and buyer turned out to be different people.

However, in many instances additional cardholders will still be protected under section 75.

However, there are some cases where Section 75 does apply, even when the additional cardholder paid.

Say that a couple bought a membership in joint names and paid using a secondary card on the husband's credit card account.

If, for whatever reason, there is a good case for a section 75 claim, both will benefit from it so it should be irrelevant that there's just one card.

All in all, section 75 is increasingly penetrating the public consciousness for its ability to cover cardholders from a variety of purchase situations going wrong but cardholders shouldn't be too blase about the protection it affords.

Generally speaking, to minimise the risk of having to take a claim to the Financial Ombudsman service - it's best to avoid using additional cards for large purchases.

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