Retailer refusing a refund? A credit card may help

By Helen Fowler

Buying an item that breaks within a week is irritating -- especially if you it back to the store and the sales assistant denies you a refund. Or maybe you paid a travel agent for a great package holiday -- then found out the airline included in the package went out of business. But there's good news: If you paid for any of these goods or services with a credit card, you can get your money back.

Under Section 75 of the 1974 Consumer Credit Act, if you use a credit card to pay for something that costs between £100 and £30,000, the credit card provider is jointly liable with the retailer for any ensuing problems with the item.purchase-protection

Section 75 applies if:

The goods you bought were defective or unfit for their intended purpose;

  • You paid for an item, but never received it;

  • The company goes out of business before supplying you with the promised goods, or

  • You paid for the goods or services using a credit card (cheque, debit card or cash payments are not covered because they don't provide the same statutory rights if something goes wrong, says Katherine Liggatt, of the Financial Ombudsman Service).

Even if you only used your credit card to pay for a portion of the overall purchase (for instance, if you use your credit card to make a £100 deposit to pay for a £1,000 holiday), the entire purchase is protected.

How to claim your refund
Tell your credit card provider you'd like to make a claim under Section 75. They should be able to give you the necessary paperwork. If you're not happy with how they treat your claim, consider getting in touch with the Financial Ombudsman, the independent organisation set up by law to handle consumer complaints.

"Section 75 only applies in certain circumstances," says Liggatt. "But if these are met and the goods or services you've paid for don't turn up or they are not of the required standard, consumers could get their money back from the company that provided the credit."

Section 75 is a law, not a perk
The protection has been around for around 40 years, but many people remain unaware of their rights.

Beware the card providers that promise free purchase protection, encouraging you to believe they are being kind to you. Covering you against shoddy or non-existent goods isn't on a par with free flights, money back and gifts -- they are only following the law.

But keep in mind that if you don't pay off the purchase on your credit card, filing a claim won't stop interest collecting on the original purchase.

Credit cards that do offer additional protection
Most electrical goods come with a one-year manufacturer's warranty. But if you want even more protection -- and don't want to shell out for an extended warranty from the retailer -- you might want to consider one of the handful of credit cards that offer extended warranties, such as:

  • Ulster Bank Gold MasterCard: One-year extended warranty on appliances costing between £75 and £2,000. You can register up to six appliances per year. To qualify for cover, you must register your item within 90 days of purchase. The card also comes with purchase protection for smaller items costing £50 or less, in case of loss or accidental damage. Purchases must not be covered by any other insurance.

  • HSBC Premier credit card: Extended warranty for up to two years on select household appliances costing between £50 and £2,000. You can register up to three appliances per year. You must purchase the appliance in full with your credit card and register it within 90 days of purchase. HSBC recommends customers call before making a purchase, as some items are excluded from this cover.

  • Capital One Aspire Elite credit card: Two-year extended warranty on a wide range of electrical goods purchased with the card. However, items must come with a minimum two-year manufacturer's warranty to qualify for the extended warranty. It also covers most items purchased with the card in case of accidental damage, fire or theft for 30 days after the purchase.

  • American Express Platinum Cashback credit card: Refund protection on eligible items purchased with the card. Items are covered up to 90 days, and American Express will replace or refund up to a maximum of £300, even if the retailer won't. It also offers purchase protection, which covers items stolen or damaged within 90 days of purchase. The provider will replace it, repair it, or refund you up to £2,500. The British Airways American Express credit card and American Express Nectar credit card offer similar protection.

  • See related: Credit card travel insurance could protect you from holiday nightmares, Don't want a credit card? Here's why you might need one

Published: 20 February 2014