Credit cards give extra protection in winter salesSection 75 and Visa chargeback offer vital cover

29 December 2009

Card fan

Unless you really need to, try not to withdraw cash using your credit card - the interest rates are eye-wateringly high

As a record number of shoppers hit the post-Christmas sales, the way you pay for your bargains could have a major impact on the consumer protection you'll receive on your purchases, warns Which?.

If you’ve bought an item in the sales that proves to be faulty, you can make a claim under the. However, if you paid by credit card or Visa debit card, you have other options that could make life much easier if you need to complain – including Section 75 cover and chargeback.

Consumer Credit Act rights

If you paid for your shopping using a credit card, Section 75 of the Consumer Credit Act states that the credit card company is ‘jointly and severally liable’ for any breach of contract or misrepresentation by the retailer. This means it is equally responsible along with the trader for the goods or service, and you can put your claim to the credit card company.

You don’t have to reach a stalemate with the retailer or trader before you can contact the credit card company. This right is particularly useful if the retailer or trader has gone bust or it doesn’t respond to your letters or phone calls.

The protection also applies if you buy goods for delivery to the UK from overseas by telephone, mail order or over the internet.

When you can claim against your card company

There are some limitations to when a card company is liable along with the retailer or trader. The goods or services you have bought must have cost over £100 and not more than £30,000.

However, you don’t have to have paid the full amount on your credit card – the card company is liable even if you made only part of the payment (a deposit, say) on your card. And this part-payment can be as little as £1. It is the value of the goods you are buying that is key, not the amount paid on the card.

When you can’t claim against your card company

There are some transactions where the company that dealt with your card payment is not the same as the one that provided the goods or services. For example, if you buy something online and use Paypal or a similar payment service, section 75 doesn’t apply. Section 75 doesn't apply to payments made by credit card cheque either.

Additional cardholders may also not be covered. If your partner has a credit card and has added you as an additional cardholder, it's usually best to get the main cardholder (your partner) to make any big purchases, rather than using the extra card yourself. Several credit card companies have taken the view that section 75 does not apply if a purchase made on an additional card does not benefit the main cardholder.

Also, the law applies only to credit cards and not to debit cards (such as Visa Delta or Maestro) or charge cards (where all charges must be settled at the end of the month). It's possible that you may be able to use 'chargeback' instead to get some or all of your money back.

What is chargeback?

The Visa and Mastercard logos

Chargeback is a process that allows you to reverse a transaction if you are unhappy with the item received or if your credit or Visa debit card has been used fraudulently.

Chargeback is not enshrined in law like section 75, but is part of the Visa Scheme Rules, which participating banks subscribe to. It applies to all Visa debit cards, and can also be used for Visa credit card purchases where section 75 is not applicable – for goods costing less than £100 for instance. It also covers prepaid Visa cards and Visa Electron purchases.

MasterCard operates an equivalent scheme, but this only applies to MasterCard credit card payments, not to purchases made with a Maestro debit card. American Express does not offer a chargeback scheme.

When can chargeback be used?

Like section 75, chargeback can be used in cases of goods not arriving, arriving damaged, arriving not as described, or where the merchant has ceased trading.

Claims must be addressed to the bank that provides your Visa debit card or your credit card, which in turn will put in a request to the merchant’s bank.

FOS logo

It's free to complain to the Financial Ombudsman Service if you've reached deadlock with your bank

Martyn Saville, Which? credit card expert, says: 'If you have any trouble when putting in a claim to your credit or Visa debit card provider, ask to speak to a supervisor. Chargeback is less well-known than Section 75, and some bank staff may not be aware of this rule.

If your card provider rejects your chargeback claim, you can take your case to the Financial Ombudsman within six months of your final correspondence.'

More information on section 75 and chargeback

For more details on chargeback and section 75, read the Which? guide to your credit card rights. To find the best credit card to use in the sales, check out Which? best rate credit cards for 0% purchase deals and everyday credit cards for borrowing.

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