My wife is a secondary cardholder on my credit card account. She used the card to purchase a holiday, but the holiday company unfortunately went bust before her trip. I tried to get a refund using Section 75 of the Consumer Credit Act of 1974, but the credit card company refused. Can it do this?
JENNY SAYS: The short answer is yes it can, unfortunately. It all comes down to the rules around what makes a valid Section 75 claim.
The name couldn’t be any less exciting, but Section 75 is a brilliantly valuable piece of legislation that every credit card customer – and every prospective credit card customer – should know about. It’s the reason why paying with plastic is a great idea for bigger purchases (assuming you’ll be able to pay off your balance on time).
When you pay for goods or services costing between ?100 and ?30,000 with a credit card, Section 75 makes your card provider jointly liable with the retailer if there turns out to be “misrepresentation or breach of contract”.
In other words, it means you can ask your card company for a refund if an item or service is not delivered, is faulty or not as described, or – as in your case, the retailer has gone bust and hasn’t provided what you paid for. You can make a claim to both the retailer and credit card provider simultaneously, although you can’t recover your losses from both.
You don’t even have to make the full payment by credit card to be protected for the item’s total value. You could pay just a penny of a ?100 order by card, and the remainder by cash, for example, and your card provider would still be liable to refund the full ?100 if something goes wrong.
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However, a little-known clause states that if the purchase is made by the secondary card holder, and the primary card holder doesn’t benefit from the purchase – in your case, the holiday for your wife – then Section 75 will not apply. Had it been a holiday for both of you, it’s likely your claim would have been successful.
This isn’t the only potential drawback of being a secondary card holder. If you don’t have any or many credit accounts of your own, you’ll also have a thin credit history – which can make it harder to access financial products in future, as lenders have a more limited picture of your credit worthiness. This is a particular issue for women, who are more likely to have financial accounts in their partner’s name.
Back to the problem of your failed Section 75 claim: in situations like yours where Section 75 doesn’t apply, there is another potential route to a refund. Chargeback is an alternative protection that extends to debit and prepaid cards too. Unlike Section 75, it covers purchases of any value, but it’s not a legal protection and there’s a time limit on claims – typically 120 days from the purchase date.
Any other readers who want to find out more about these protections, including how to make a claim, can go to www.which.co.uk/section75.
There’s no set timeframe for card providers to resolve a chargeback or Section 75 claim, but if you’re unhappy with the outcome of the claim, or how long it’s taking, you can complain to your provider. If you haven’t reached a resolution within eight weeks, you can escalate your complaint to the Financial Ombudsman Service.