Grounded fliers' card purchases protected?

By UK CreditCards.com

Section 75 applies for travel refundsThe volcanic ash cloud has caused unprecedented disruption to air travel across Europe in recent days. Some Britons have seen their holidays go up in smoke as a result of the huge number of flight cancellations, while others have been left stranded in destinations across the world. But what protection is on offer for those who purchased their flights with credit cards?

Section 75 protection
Consumer watchdog Which? noted that some consumers may be spared financial losses by Section 75 of the Consumer Credit Act 1974. This legislation covers Visa or MasterCard credit card transactions which cost between £100 and £30,000. It states that any individual who is not satisfied with the goods or services they receive is entitled to a refund. Furthermore, credit card providers are deemed 'jointly and severally liable' for any breach of contract, meaning customers can approach them directly for their claim.

Consequential cover
Which? also explained that Section 75 provides stranded customers with 'consequential cover,' which should allow them to recover 'out of pocket' expenses such as hotel bills, food and transport. "Keep all receipts and speak to your credit card provider about this when you get back to the UK," said the watchdog group.

However, the UK Cards Association has warned that there is only a "very vague" understanding of the exact level of cover provided by this aspect of Section 75. "It matters on a case by case basis," the association's Sandra Quinn told the Daily Mail. "You can't just book a five-star hotel to tide you over if you were staying in a three-star for the length of your holiday."

When Section 75 does not apply
The waters are further muddied by the fact that the volcanic eruption in Iceland is being regarded as an 'act of God.' Some consumers may be disappointed to find out that they are not eligible for a refund as their credit card provider has this type of extreme scenario written into the small print of their terms and conditions.

In addition, Section 75 does not cover PayPal transactions or payments made by credit card cheques. Meanwhile, individuals who bought flights as additional cardholders on a credit card account should also be aware that they may not be covered by the act. This is particularly true if just one ticket was purchased, meaning the main cardholder is not receiving any benefits from the transaction.

Value of credit card purchases
Despite the despair and upheaval undoubtedly created by the ash cloud, many consumers will be comforted by the knowledge that they should be able to get their money back. Perhaps the most valuable lesson to take from the episode is that there is always a case for buying goods and services on credit cards when such a strong level of protection is available.

Published: 21 April 2010