Chargeback and Section 75 are two distinct consumer protection mechanisms in the UK, both offering recourse when a purchase goes wrong, but differing significantly in their legal basis, scope, and the level of protection they provide. While chargeback is a scheme governed by card network rules, Section 75 is a powerful legal right under UK law.
Introduction to Consumer Protection
When you pay for goods or services using a card, and the merchant fails to deliver, the goods are faulty, or the service is not as described, you might be able to claim your money back. In the UK, two primary avenues for this are Chargeback and Section 75 of the Consumer Credit Act 1974. Understanding their differences is key to knowing which one to pursue and what to expect.
Chargeback Explained
Chargeback is a consumer protection measure provided by card schemes (such as Visa, Mastercard, and American Express) rather than a legal right. It allows your bank or card provider to reverse a transaction if you have a dispute with the merchant.
- How it works: You contact your bank or card provider directly, providing details of the transaction and the reason for the dispute (e.g., goods not received, faulty items, duplicate transaction, fraudulent use). The bank then raises a dispute with the merchant's bank, and if successful, the funds are returned to your account.
- Card Types: It applies to transactions made with both debit cards and credit cards.
- Transaction Amount: There is generally no minimum or maximum value for a chargeback claim.
- Recovery Limit: A key limitation of chargeback is that the amount you can recover is typically limited to the exact amount that was paid directly on that specific debit or credit card. For instance, if you paid a £100 deposit on a card for a £1000 item and the rest in cash, a chargeback would generally only allow you to reclaim that £100 deposit.
- Time Limits: Time limits for making a chargeback claim vary by card scheme, but generally, you have 120 days from the date of the transaction or when you became aware of the issue.
Section 75 Explained
Section 75 of the Consumer Credit Act 1974 is a significant piece of UK consumer law that offers robust protection when purchasing goods or services using a credit card. It makes the credit card provider jointly liable with the merchant for any breach of contract or misrepresentation.
- How it works: If a merchant breaches their contract with you (e.g., selling faulty goods, failing to provide a service), you can claim against your credit card company directly, in addition to or instead of the retailer. This is particularly useful if the retailer goes out of business.
- Card Types: Applies only to credit card purchases. It does not apply to debit card transactions.
- Transaction Amount Thresholds: Section 75 protection applies to individual items or services that cost between £100 and £30,000.
- Crucially, you don't have to pay the full amount on the credit card; even if you paid only a deposit (e.g., £1) on your credit card and the rest by another means, as long as the total cash price of the goods or services is between £100 and £30,000, Section 75 can provide protection for the entire amount.
- Recovery Scope: Unlike chargeback, Section 75 allows consumers to claim the full cost of the goods or services from the credit card provider, even if only a portion was paid on the credit card, provided the total purchase price falls within the £100-£30,000 range.
- Jurisdiction: Applies to purchases made in the UK or abroad, as long as the credit card company is based in the UK.
- Time Limits: You generally have up to six years to make a Section 75 claim from the date of the breach of contract.
Key Differences Summarized
| Feature | Chargeback | Section 75 of the Consumer Credit Act 1974 |
|---|---|---|
| Legal Basis | Card scheme rules (e.g., Visa, Mastercard) | UK Law (Consumer Credit Act 1974) |
| Card Types | Debit and Credit Cards | Only Credit Cards |
| Transaction Value | No minimum/maximum (generally) | £100 to £30,000 (per item/service) |
| Liability | Card issuer requests funds back from merchant | Card provider is jointly liable with merchant |
| Recovery Amount | Limited to the amount paid on the card. | Full purchase price, even if only a deposit was paid on the credit card (within thresholds). |
| Protection Scope | Disputed transactions, non-delivery, fraud | Breach of contract, misrepresentation |
| Time Limits | Typically 120-180 days from transaction/issue | Up to 6 years (from breach of contract) |
When to Use Which?
- For Debit Card Purchases: Chargeback is your only option for claiming money back directly through your bank for debit card transactions.
- For Credit Card Purchases within the £100-£30,000 range: Section 75 offers superior protection. It's particularly valuable if:
- The merchant has gone out of business.
- You paid only a small deposit on your credit card but want to recover the full value of the item.
- The problem is a breach of contract or misrepresentation by the seller.
- For Credit Card Purchases under £100 or over £30,000 (per item/service): Chargeback might be your best bet if Section 75's thresholds aren't met.
- For Online Fraud/Unauthorized Transactions: Both can be used, but chargeback is often the quicker and more direct route.
Important Considerations
- First Port of Call: In most cases, you should first try to resolve the issue directly with the merchant.
- Evidence: For both chargeback and Section 75 claims, having clear evidence (receipts, communication with the merchant, photos of faulty goods) will strengthen your case.
- Financial Ombudsman Service: If your card provider rejects your claim for either chargeback or Section 75, you can escalate your complaint to the Financial Ombudsman Service (FOS) for an impartial review.
In essence, while chargeback is a procedural refund mechanism based on card scheme rules, Section 75 is a robust legal right under UK law, offering significantly broader protection for credit card users within specific transaction value limits.
