Complaints jump by 40% year on year
24 October 2024
The number of financial complaints we received in the first half of 2024 rose by over 40%.
Misunderstanding credit protection could cost consumers thousands
Not understanding the rules around ‘Section 75’ claims could affect consumers’ chances of getting their money back.
- Common misconceptions around ‘Section 75’ claims can affect customers’ chances of a refund.
- Each year we hear from thousands of people who have had their claims for money back rejected.
- For the first time we published a myth-busting guide to improve understanding.
Each year, we receive thousands of complaints from consumers who have their claims for reimbursement rejected by their credit provider.
‘Section 75’ – shorthand for Section 75 of the Consumer Credit Act 1974 – covers purchases made by a credit card, point-of-sale loan (a loan arranged by the retailer to pay for goods) or other finance. If a product is faulty, doesn’t arrive or wasn’t as described and consumers aren’t able to resolve this with the supplier, they may be able to claim back the value from their credit provider. However, all purchases must meet certain criteria to be considered under the rules.
To help consumers to understand their rights, we have addressed a series of myths about the Section 75 claims process:
- Myth: It’s only for credit cards
Fact: Section 75 can apply to point-of-sale loans used to buy goods or services, as well as some store cards and catalogue accounts. It doesn’t apply to purchases paid wholly by debit card or bank transfer.
- Myth: It applies to products and services of any value
Fact: The cash price of the goods or services must be more than £100 but not more than £30,000. This is the cost per item – a purchase of multiple items which added up to more than £100 wouldn’t qualify unless they were sold as a set.
- Myth: The whole amount must have been paid by credit
Fact: It's the cash price of the goods or services that matters, not what you paid on your credit card or loan. Section 75 applies even if you only made part of the payment using credit.
- Myth: It doesn’t matter who used the credit card
Fact: Section 75 only applies if the primary cardholder uses the credit card to purchase something for themselves.
- Myth: There’s no other option if my bank rejects my claim
Fact: You can complain to your credit provider and ask them to look again at your claim. If you’re still not happy, you can bring your complaint to us for free.
Viv Kelly, Ombudsman Director for Consumer Credit said:
While Section 75 can offer consumers good protection, it’s important to make sure your spending qualifies before you make a claim.
If you think your purchase meets the criteria but your credit provider rejects your claim, you can complain to them and ask them to look into the matter further. If you’re unhappy with their final response, you can refer your complaint to the Financial Ombudsman Service.
Getting a fair answer is free and easy and you don’t need to use a professional representative or Claims Management Company to bring a complaint to us.”
To help improve understanding of this issue, we have provided some case studies based on real examples:
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A consumer came to us when his bank refused his Section 75 claim. His wife, a secondary cardholder on his credit card account, purchased a dress which was sold as being part of a new collection.
She later found out that it had also been sold the previous year. The consumer’s wife felt that the dress had been misrepresented so submitted a Section 75 claim, but the bank refused it. We agreed the bank was right to reject the claim as the primary cardholder hadn’t been involved in the purchase.
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Around 18 months after purchasing a new sofa on credit, a consumer began to experience problems with the product. The warranty company conducted a report and the consumer was happy to accept a repair, but by that time, the company she had purchased the sofa from had entered administration.
She wasn’t able to use the sofa so disposed of it and approached the credit company for a refund. They refused the claim, but we said that the sofa wasn’t of satisfactory quality and upheld the complaint.
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In another case, a consumer came to us when their credit card company refused their Section 75 claim for a comedy event which was cancelled when the organiser entered administration. He had spent £209 for four tickets costing £45 each, £10 for “premium parking” and a £19 booking fee. The credit card company refused his claim as none of the tickets were more than £100 in price. We agreed the company was right to reject the claim for this reason.
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After a holiday accommodation provider cancelled a booking and didn’t provide a refund, a consumer made a Section 75 claim to their credit card provider. Of the total £5,000 cost, they had paid £1,250 on their credit card and the remaining £3,750 by bank transfer. Her credit card company refused the claim, but we found that they should give the customer all of the money back with interest.
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