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Refunds When you Pay by Credit Card

By: Lorna Elliott LLB (hons), Barrister - Updated: 8 Jul 2018 |
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If you pay for something on a credit card and ask for a refund, the shop will refund the credit back onto the card. But what if something goes wrong with the purchase?

There are certain benefits to paying for goods and services with credit cards. The Consumer Credit Act 1974 protects consumers who pay with credit in certain circumstances. If you have a claim against the supplier (i.e. the business that sells you something) the credit card company will also be ‘jointly and severally liable.’ This applies to single items that cost between £100 and £30,000 that are bought on a credit card but does not include delivery and other charges. For example, if you buy two items for £99 each, and delivery is £5, you wouldn’t be covered. A single item costing £100 and with a £2 charge for delivery would be covered by the law.

Purchases That Qualify For Refunds

The legal protection offered to consumers who pay by credit card applies to both goods and services. However there are some exceptions: the protection doesn’t cover purchases made with credit card cheques or cash withdrawals on credit cards. Purchases must be made by the ‘principal cardholder’, so if you lend your card to a family member, or a secondary cardholder makes a purchase, these won’t be covered. You are however still covered if the purchase takes you over your credit limit.

The goods or services must be purchased directly, and not through an agent or intermediary. This means, therefore, that if you pay for a flight through a travel agent, and the airline goes into liquidation, you will not be covered. For the credit card company to be jointly liable, it must have a direct relationship with the company you bought from. Travel agents are not the suppliers, so in these circumstances you would only be covered for the loss if you had bought the flight direct from the troubled airline.

Similarly, this protection doesn’t cover payments made through online processors such as Worldpay, Google Checkout or Paypal. Though these methods have their own schemes for refunding your money, the protection they offer is not quite as strong as that offered by the Consumer Credit Act. Online payment processors do however offer an added benefit that helps to prevent fraud, in that your sensitive payment details are not disclosed to the seller.

Paying A Deposit On Credit

Interestingly you don’t need to make the entire purchase on the credit card. If you only pay a nominal deposit with your card and paid the balance of the item in cash, by cheque or using a debit card, the value of the whole purchase would still be covered by the legislation. For example, you ordered an item of jewellery from a shop by paying £200 on your debit card and the remaining £20 on your credit card. If the jewellers went into liquidation before the item arrived at the store, you would be covered for the full amount even though you’d only paid a small portion with your credit card.

How To Get Your Refund

If the company has gone into liquidation, telephone your credit card company and say “I would like to make a section 75 claim under the Consumer Credit Act.” They will send you a form to complete. Do not let the credit card company tell you that they need to claim the money from the supplier first: this is not the case. You are entitled to assert your legal rights regardless of whether they decide to pursue the company or not.

If the supplier hasn’t gone into liquidation but there is a problem with the goods, it’s up to you to decide whether to approach the supplier or the credit card company. Frankly, it’s much easier to deal with the company you bought the goods from unless, for example, you bought the goods from an overseas seller and they never arrived. Again state that you are making a section 75 claim under the Consumer Credit Act and ask them to send you the appropriate form. If this doesn’t solve the problem, make a complaint to the Financial Ombudsman.

Making purchases using credit cards offers a significant amount of protection, especially in times of economic instability. However, the benefits of this kind of protection can be outweighed by prohibitive interest rates. If you are disciplined enough to pay off your credit card balance every month and therefore avoid interest charges, this can be a very shrewd way of ensuring you get your money back. When you pay using credit, the law is on your side.

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[Add a Comment]
Sue - Your Question:
I bought to settees.Both had faults.They went back and back again Then the last time I asked for my money of £4187 pounds What are my rights.It's gping to court

Our Response:
Your rights are laid out in the link here, which should tell you all you need to know.
WheresMyRefund - 9-Jul-18 @ 11:10 AM
I bought to settees.Both had faults .They went back and back again Then the last time I asked for my money of £4187 pounds What are my rights.It's gping to court
Sue - 8-Jul-18 @ 2:09 PM
I sent for a car mirror, told them all the details of the car and paid with myself credit card.when it came it was all wrong to what I toor him. ANYway how do I get a refund because I sued myself credit card ???.
wilb - 22-Dec-16 @ 5:47 PM
Hi, I hope that somebody can help me. I have recently cancelled my car insurance policy as my car was no longer roadworthy. The company said that they will send me a cheque payment within 30 days. I never received this payment, so I got on to them about this. There said that they have now refunded the amount to the original card. The thing is this was a credit card, which I have now paid off and closed. How do I go about getting the refund from the credit card company, even though the account has been closed? Any help anybody could give me would be greatly appreciated. Kind regards Richard
Richie - 12-Jun-14 @ 2:55 PM
What happens if I receive a refund for goods purchased on a credit that failed to arrive and then the goods arrive after the refund takes place. Do I have to keep the goods I can I return them?
Andy - 9-May-14 @ 6:09 PM
We have just paid £6.000 for caravan with my credit card. The seller tourer world caravans told us it was a continental caravan and was a much better caravan than an English one. But what he did not tell us that we would have trouble trying to get the caravan on a caravan park because the door is on the other side, and we would have to park the caravan the wrong way. Because of health and safety namely fire the caravan could not be hitched up and moved quickly, (the towing hitch would be facing the wrong way).
Dizzie - 27-Apr-14 @ 2:24 PM
I paid for a holiday on my m&s credit card for my son and his partner but on the way to the airport they had an accident , no other cars involved and thankfully they were ok but very traumatized , so much so that they couldn't go through with their trip!Could I get a refund forthis! Many thanks
Didi - 13-Feb-14 @ 9:36 PM
do I need to pay my credit card account before I am reimbursed due to failure of delivery of goods?
crongie - 7-Feb-14 @ 9:55 PM
I put my classic car in for total renovation and respray.16 months later the dealer has returned car not finished and the car is a empty shell all parts are in car or in my wifes minibus. Can I get full compensation, I paid part of bill by cash and credit card. Thanks Rob
robert tanner - 25-Nov-13 @ 2:37 PM
Can I claim a refund on a holiday paymentmade in full on my credit card and made directly to the holiday company.I have requested a refund or replacement holiday but have been told that the cancellation protection I purchased does not cover illness of pets,this being the reason for my cancellation.The holiday is for my sister and myself and is for 5nights at a Warmers hotel starting next Wednesday 4/9/13.Thank you in anticipating your reply.
Camio - 28-Aug-13 @ 11:07 AM
I bought three plots of land between 2004 and 2005 and first applied to MBNA for a S.75 refund as both companies were closed down for misrepresentation by different organisations - I bought two plots from a landbanking company closed down by a joint agency court petition (which included a company investigation) and the other plot from a company who sent purchasers letters stating that they were being investigated by the FSA...(after contacting ActionFraud South Yorkshire Police contacted me to say ' Operation Landlocked' was a joint venture that saw the closure of the company but the directors were not charged with conspiracy to defraud and the FSA will not divulge information to purchasers although Jonathan Phelan suggests that the FSA wants to help victims of landbanking fraud, I used by Abbey National/MBNA card to purchase two plots, and I am still fighting for my refund (awaiting a court date), after almost three years - even going to the FOS. I was extremely disappointed in the attitude of the FOS, as I sent evidence in ie the court petition that related to one of the purchases, but no0one bothered to read the evidence, and as my husband was extremely ill, I had no time to spend writing letters....I was so so stressed too and really didn't need the extra pressure MBNA and the FOS placed on me. My husband passed over. Since his passing I found additional paperwork for the FSA investigated company so sent this for the FOS adjudicators attention but found that the Ombudsman concentrated on the terms and conditions rather than my claim of misrepresentation. In May 2011 I received the final decision stating that I paid for land and that is exactly what I got. I went to the CAB and explained everything. The gentleman helped me draft a letter to both MBNA and the FOS about the first two plots. I paid for the third plot using my M&S Money card, and this too was in the hands of the FOS. However, once the CAB helped me draft a letter emphasising the company investigation section of the Joint agency Court Petition the FOS attitude started changing (apart from the original adjudicator leaving and the file with the drafted letter in being left 'somewhere' until I emailed enquiring about progress). M&S Money initially offered me 50% of the purchase price - because the company director used another of his companies for the credit card transaction. With the help of the liquidators I was able to show that a relationship existed. I was eventually paid - but had to fight for interest as, due to the lengthy process, the interest was significant! I am amazed at how different credit card companies are interpreting the CCA (1974) section 75 differently....I know of teo other women fighting for refunds in similar circumstances to me....it is so distressing!!. .
Gillybobs - 12-Aug-12 @ 8:48 PM
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