Are credit cards still the safest way to pay?

You’ve probably heard of Section 75 – it’s often pitched as the holy grail of card protections – but after 51 years, this vital legislation is showing its age. 

The way we pay for goods and services has been transformed since the Consumer Credit Act (CCA) was introduced in 1974. Today, intermediaries – such as online marketplaces, booking sites and payment processors – are often sandwiched between you and the suppliers. 

This means you can find out too late that Section 75 isn’t the simple fix you assumed it to be. 

Even experts struggle to apply very old regulations to modern payments, let alone shoppers, leading to the government opening a consultation to review these protections earlier in the year. 

Here, we look at Section 75’s uses, its gaps – and when a determined argument might win the day.

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The perks of paying by plastic

Shoppers run the gauntlet of shoddy goods, retailers going out of business, misleading advertising and outright scams. But, if you pay with your credit card, you can ask your card provider to step in when something goes wrong. 

Section 75 of the CCA makes your credit card company jointly responsible with the retailer if you have a claim for breach of contract or misrepresentation. 

It extends to point-of-sale loans, as well as some store cards and catalogue accounts, regardless of whether you pay in person, online, by phone or mail order. Buy now, pay later products, such as Clearpay, Klarna, and Laybuy will also be covered by Section 75 once they become fully regulated by the Financial Conduct Authority (FCA) at some point in 2026. 

Among people who used the free Which? tool to raise a Section 75 dispute this year (January to September), the average claim was worth £1,657. However, typical claims were much higher for disputes related to cars and other vehicles (£7,327) or home renovations (£5,830). 

We contacted around 50 users of the tool in August and found that decisions came fairly quickly, with 55% getting one in less than a month and 21% within one to two months. 

Making a claim was generally straightforward (considered ‘easy’ or ‘very easy’ by 59%). However, success was mixed: 35% got a full refund, 2% received a partial refund, and 23% were rejected by their credit card provider. The rest were still waiting for a decision, or decided not to submit a formal claim.

• Find out more: Section 75 of the Consumer Credit Act 

The hidden traps of Section 75

Section 75 relies on an unbroken link between you (the debtor), your credit card issuer (the creditor), and the business (the supplier). 

So, if you’ve paid for goods or services you don’t benefit from directly, such as a gift for a family member or partner, your card provider has grounds to say that it’s not you who has the contractual agreement with the retailer. 

The same goes if you’re an additional or secondary cardholder. This is because even though you’re authorised by the account owner to use their line of credit, technically speaking, you aren’t a customer of the lender. So, unless the primary cardholder also benefits from the purchase (a family holiday, perhaps), you lose Section 75 protection.

There are other, more surprising, ways the debtor-creditor-supplier (DCS) link can be broken. 

We’ve seen countless claims rejected by credit card firms because customers paid a middleman such as Airbnb, Booking.com or Expedia, rather than the hotel or airline directly. Amazon Marketplace and eBay shoppers are also told they aren’t protected when they buy goods supplied by third-.party sellers, because the payment to the platform breaks the chain. 

Firms will even say the link has been disrupted if online retailers have used third-party payment processors such as PayPal, Skrill, Stripe and SumUp. This is despite customers having no clue that this was happening behind the scenes.  

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'My refund battle with Booking.com'

Elisabetta Sciallis, who works as a principal policy adviser for Which?, used Section 75 to secure a refund after things went awry on a recent road trip with her husband in Italy.

‘We booked self-catering accommodation for one night and arrived to find it smelt of gas so it wasn’t safe to stay. We reported it to Booking.com who attempted to mediate with the owner, but the owner said the smell was normal and refused to refund. Booking.com wouldn’t either. 

‘Luckily, we’d paid by credit card and got the money back via Section 75 from Nationwide, my provider. Without this safety net, there was no clear way to recover our money, as Booking.com shifted responsibility to the accommodation provider.’ 

We asked Booking.com about the case and it told us: ‘Accommodation partners are responsible for resolving issues reported during a stay. While we advocated on the customer’s behalf, the partner maintained there was no issue with gas. As a goodwill gesture, we will refund the price difference of the alternative stay.’ 

Nationwide handled this case quickly and fairly. But if you’re told you can’t use Section 75 for claims involving intermediaries such as Booking.com, challenge this through the Financial Ombudsman Service

Challenging rejected claims

Card providers can be far too rigid in their understanding of whether a fourth party, such as a booking agent, marketplace or payment processor, severs the DCS link – so don’t take a ‘no’ as the final word. You can challenge rejections using the Financial Ombudsman Service (FOS). 

PayPal illustrates perfectly why such old regulations struggle to relate to modern ways of paying. It can act as a payment processor for businesses, as well as a digital wallet and credit provider (it offers a PayPal credit card) for shoppers. 

There’s no protection if you load your PayPal account with money using a credit card and pay a supplier from the balance. But, if you pay for goods using, say, a Lloyds credit card stored in your virtual PayPal wallet, Section 75 applies. And, when PayPal is merely acting as a payment processor for a business behind the scenes, you should be safe. 

The FOS has shared its stance with Which?, telling us: ‘While there will be times that using PayPal breaks the DCS agreement, this won’t always be the case. 

'Our current view is that where PayPal acts as a payment facilitator (such as scenarios where PayPal “Guest Checkout” is used), the DCS agreement is likely not to be broken. We also do not think the agreement is broken in some scenarios where PayPal has acted as a digital wallet, but again, every case would be looked at on its own merits.’

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'My gift card scam loss claim failed'

Louise Turner, a retired college manager from Essex, hoped Section 75 would protect her when she discovered scammers had drained the £200 gift card she’d bought for her son. 

‘I bought a John Lewis gift card from my local Sainsbury’s on my Barclaycard. When my son tried to use it, we realised it had been tampered with and the codes used. John Lewis was unable to trace who spent it and neither it, nor Sainsbury’s would accept liability.

‘I spoke to the manager of the Sainsbury’s store, who said staff always check for damage on gift cards. I was advised to make a claim on my credit card, but Barclaycard turned me down, telling me the transaction isn’t covered under Section 75 because there is no debtor-creditor-supplier (DCS) relationship. 

‘With help from Which? legal services, I escalated my claim against Sainsbury’s and it agreed to make a goodwill refund.’ 

We think Barclaycard was too quick to reject Louise’s claim. While purchases made using a gift card are beyond the reach of Section 75, her claim related to the gift cards, not goods bought with the balance. Similarly, you can ask your credit card company to reimburse the cost of gift cards over £100 if the company goes bust before you can spend them. 

When we asked Barclaycard to review Louise’s case, it said there was no evidence of a breach of contract, though it recognised its ‘communication could have been clearer’ and said it would follow up with Louise to apologise.

New thinking on old legislation

UK Finance, which represents banks and payment firms, states ‘you may not be covered’ where goods or services are bought through a payment platform like PayPal, an online marketplace retailer like Amazon Marketplace or through an agent like Expedia. But this is an oversimplification. 

While there can be no one-size-fits-all advice, when a fourth party is merely providing technical or payment services to the supplier, we feel strongly that Section 75 is preserved, so don’t let your credit card firm tell you otherwise.

Things get murkier when an additional party plays a more active role, but your credit card firm should assess any contractual obligations carefully. For example, if the likes of Airbnb promise to provide cover for when things go wrong and don’t deliver on this, you could have grounds for a Section 75 claim.

Importantly, the CCA also allows for certain circumstances where a payment can be made to one party and the goods or services can be supplied by another, and Section 75 will still apply. This is because the Act refers to the concept of ‘arrangements’ between creditors and suppliers, and the thinking on this has developed over time, following decades of case law. We’ve seen many recent cases overturned by the FOS because it deemed there to be ‘pre-existing arrangements’ or ‘contemplation of future arrangements’ between credit card firms and suppliers. 

In one such case, an Ombudsman explained that there is now a widespread commercial practice of paying sellers via online marketplaces (such as eBay) and ‘introducer’ sites (say, Airbnb and Booking.com) and this is clearly accommodated by both credit card companies and suppliers, who all benefit from the arrangement.

It was concluded that, as the credit card provider and the relevant online marketplace were both participants under the rules of the Mastercard card scheme, the necessary arrangements were in place and a Section 75 claim should have been considered. 

The complexity of the law means every complaint must be assessed on a case-by-case basis, but the message is clear – fight your corner.