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SECTION 75 of the Consumer Credit Act 1974 is one of the strongest weapons in the UK consumers' arsenal.

It makes credit card providers equally liable (with retailers) for ensuring that you get what you paid for when you made a credit card purchase.

Read on to find out which purchases are covered, how you can claim, what to do if you can't get a credit card and more.

What's covered?

The Consumer Credit Act 1974 is a piece of legislation that regulates consumer credit agreements.

Under the Act, businesses lending money or offering goods or services on credit must be licensed by the Office of Fair Trading (www.oft.gov.uk ) and that license offers protection to credit agreements between traders and individuals.

Section 75

Section 75 of the Act applies when a breach of contract occurs with a supplier, and in turns holds the payment company equally liable for that breach.

It generally applies when secondary legislation on the supply of goods or services has been broken, such as failure to meet the Sale of Goods Act.

The most common problems are when a firm fails to supply goods or services, they arrive in a faulty condition or that are not as described or otherwise mis-sold.

Under Section 75, the creditor (this can be a credit card company) is held equally liable for breaches by the supplier - even if that supplier has failed to fulfil an order because they have gone bust.

That means you can claim on items that are:

• Not-delivered: for example, you book a flight but the airline goes bust.
• Faulty: for example, you buy a TV but it doesn't work.
• Damaged: for example, you buy plates online and they arrive smashed.

You have a right to be refunded if you make a claim within 6 years (5 in Scotland) and the claim is dependent on the bank, not just the company you buy from.

Additionally, Section 75 covers more than just full payment credit card transactions:

• Purchases which cost between £100 and £30,000.
• Even if you part pay for something with a credit card, the card company is still equally liable for the full amount.
• Store cards are also covered.
• Hire-purchase agreement items.
• Other credit agreements - such as a car loan through a dealer - are covered too, though in this case the contracts will need to say something like: 'This agreement is covered by the Consumer Credit Act 1974'.

What's more, it doesn't matter what you're buying either - as long as a breach of contract has occurred and the prerequisites for cover are met (see below for more on this) whether you're buying electrical items, a sofa or airline tickets, they'll all be covered.

Extra cover

In addition, section 75 legislation has been refined over the years by legal precedents. In effect, cardholders may be entitled to much more than the bare bones the legislation suggests.

Purchased from abroad

In 2007, a ruling by the House of Lords defined that Section 75 has no territorial limitations and, therefore, cardholders who use their credit cards to make purchases abroad are protected in the same way as in the UK.

They concluded that there was nothing in Section 75 that indicated there was any territorial limitation on the obligation of the credit card companies.

The new ruling now means that as well as in the UK, purchases made on a credit card may also be covered under Section 75 when:

• goods or services are purchased from a foreign supplier whilst the cardholder is abroad
• goods or services are purchased from a foreign supplier for delivery to the UK
• goods or services are purchased from a foreign supplier or agent who is temporarily in the UK

Partial payments

For example, you pay for a dress £100 on card and £500 in cash. You're covered for the full £600.

Additionally, even if you only pay £10 on a credit card, as long as the full purchase price is more than £100, cover will still apply for the full amount.

Another example of this is paying just the deposit for a holiday on a credit card, as long as the full holiday price is over £100.

The Financial Ombudsman Service cites a claim that it upheld in the customers favour where a man used his card to pay a deposit for a package deal from a travel agent. Part of this package consisted of flights that the agent had arranged.

Before the man left for his holiday, the airline went out of business and he had to buy two new tickets. The ombudsman found in favour of the man's subsequent claim because a contract existed between the man and the travel agent to supply the holiday package.

The contract was breached by the travel agent failing to supply the tickets that were part of the package.

Individual items bought as a set

Individual items that cost less than £100 but have been bought as a set costing more than £100 are covered.

For example, you buy a book of ten boat trip tickets for £220 and make three trips. The boat company goes bust. You can claim for the whole £220 even though each ticket is only £22 and 3 x £22 is only £66.

Only partly supplied services

While not an explicit rule of Section 75, there may be cases where partly supplied services could be covered under the legislation.

An example of this could be where a year's membership to a golf club was purchased, but the golf club went out of business and closed it's facilities after only 3 months into the membership.

The Financial Ombudsman Service (FOS), the watchdog that deals with consumer claims, told us that in cases such as this scenario "it may be appropriate to consider how much a replacement membership for the remaining term would cost elsewhere."

So, in other words, the credit card provider may choose to refund the membership in full or to cover the cost of a replacement elsewhere.

However, the key word in the FOS advice, though, is 'may'.

It is worth noting however, that section 75 rulings are made on a case by case basis and just because all the conditions are met for a section 75 claim, it doesn't mean that every credit cardholder will be able to get a refund for a partly-delivered service.

Consequential losses

The legislation may even offer a refund for any outlay you had to make (known as a 'consequential loss') as a result of the problem.

For example, we've heard of cases where holiday-makers who got trapped abroad when their airline went bust bought flights to get home and claimed the amount back under section 75.

Just as we noted above, this also applies when the cardholder has only part-paid for goods on their credit card and settled the rest using a different method (debit, cheque or cash).

What's not covered?

Unfortunately, though, precedence can cut both ways.

The way Section 75 is worded in law means that it relies on a clear relationship that goes:

consumer (that's you) > credit card provider > retailer

And various rulings down the years have found that anything that upsets that clear line means that you're not covered. There are four big examples of this.

1. Third party payment systems

Consumer > Paypal > credit card provider > retailer

Completing a credit card transaction through a third party payment service means that the credit card provider and the seller are no longer in a direct relationship so are not equally liable.

This happens with payment services such as PayPal, as well as Amazon Marketplace, Worldpay and Google Checkout.

They create an extra link in the chain and so when PayPal is used for payment, there is no direct connection between the bank of the customer and the bank of the seller to qualify for consideration under section 75.

Some of these services do offer their own buyer protection though, such as PayPal's protection for buyers and while the level of protection isn't as strong as Section 75, they can be safer in certain situations than paying directly.

Shopping on eBay or Amazon Marketplace with private sellers, or on smaller websites for items under £100, are good examples of this.

2. When additional cardholders pay

consumer > additional cardholder > credit card provider > retailer

You're responsible for any additional cardholders on your account so it counts as an additional step. However, there is an exception. If you pay on an additional card for an item for yourself and the cardholder (a joint membership, for example) you'll be covered.

Since the law is a little murky on this one, however, paying for larger items with the original card is advisable.

See our additional cardholders and Section 75 guide for more on this.

3. Travel agents

consumer > travel agent > credit card provider > retailer

Like Paypal, travel agents are regarded as an 'additional step' in the process. Say an airline goes bust. If you paid the airline directly you're covered. If you paid a travel agent they're a third party.

Check, though, that the travel agent is truly a third party (i.e. not just the airline in disguise). If not, you may still be protected.

4. Paying by cash

consumer > ATM machine > credit card provider > retailer

If you withdraw cash from a credit card (which you should never do anyway due to the high cost involved) and use it to pay for an item it won't be covered under Section 75. The same goes for credit card cheques.

Section 75 cover without a credit card

If you've got a bad credit rating, you might have been refused a credit card when you applied to a lender. But if you want the peace of mind that Section 75 offers, you can still get it under the following schemes:

• The CashPlus Prepaid MasterCard. It's a pre-pay card, meaning you have to load it with cash in order to spend on it. It's one of the few prepaid cards issued under the Consumer Credit Act - so purchases made with the card are protected under Section 75. Note though, that the same limitations such as purchases must cost over £100 still apply.
• Chargeback. While not Section 75 cover, Visa and MasterCard both offer Chargeback services and debit cards are included in this. The issuing bank can regain the value of a payment made from the supplier's bank to pass back to your own account.

Cover for purchases under £100

If you've paid for a purchase costing between £10 and £100 and you've used a Visa or MasterCard credit or debit card, you stand a chance of getting reimbursed with Chargeback if the goods don't show up or the firm you buy from goes bust.

When making a Chargeback claim it's important to remember that the onus is on you to raise the problem as early as possible and not more than 120 days after you first noticed it.

Contact your bank and tell them you'd like to question a payment. They can then contact the supplier's bank to initiate the Chargeback process.

Making a claim under Section 75

To get money back under Section 75 you first need to call your credit card provider (so: American Express, Barclaycard, RBS...) and tell them you intend to make a claim.

The law is very clear: credit card providers and retailers are equally liable for the delivery of goods.

However, the credit card provider will usually ask that you make all possible efforts to first resolve the issue with the retailer. Although, under law, you're not required to do this, to move the process along include in your claim the steps you've taken to resolve the issue so far.

If the supplier has gone bust - a classic case for Section 75 - that should be pretty simple.

Similarly, although this protection is your right under law it doesn't mean that you won't have to be persistent to get it.

According to a recent study, an astounding 59% of credit card providers gave false or misleading information to customers calling to make a section 75 claim.

We've seen many consumers who were told on the phone that they couldn't get a refund succeed after correspondence through a clear, concise letter or email.

Please note we can only provide general information and cannot answer questions about specific cases in the comments, sorry.

If you need specific help or information on your rights an advice agency such as Citizen's Advice or Consumer Direct would be able to respond directly and give you more in-depth information.

Additionally, if cardholders are not happy with how the card company deals with their complaint, they can ask the FOS to look into it. More information on Financial Ombudsman claims can be found on their website.

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