What happens if you need a credit card payment refund?
Buying things on a credit card can be a sensible decision, because they give you more protection than debit cards if things go wrong, like your item doesn’t show up or is faulty.
In this guide we’ll explain when you are entitled to a refund on a credit card purchase, and how to go about the process of claiming it.
What are my general rights to a refund?
Regardless of how you pay for it, you are entitled to a full refund on faulty goods within 30 days. After 30 days, you are entitled to a repair or replacement for up to 6 months.
If you have just changed your mind, you don’t have a right to a refund under the Consumer Rights Act, although many retailers offer refund or exchange within a certain time limit as part of their returns policy.
Why are credit card refunds different?
One of the main advantages of buying things on a credit card rather than a debit card is that if you need a refund because something is not as described or faulty, or the retailer goes bust, the credit card provider, not just the retailer, is responsible for making sure you are not out of pocket.
This is because of something called “Section 75 of the Consumer Credit Act, 1974”, which states that on purchases of single items worth between £100 and £30,000, the provider is jointly liable with the retailer if you don’t get what you paid for.
The purpose of this legislation is to protect people from going into debt for things they didn’t receive, or were not as described.
When might I need to use Section 75?
- If the retailer has gone bust, leaving you without goods already paid for.
- If you receive an item that is not as described and the retailer rejects your refund request.
- If you receive an item that is faulty or not fit for purpose and the retailer rejects your refund request.
How do I get a credit card refund?
The best course of action for your transaction dispute process will depend on whether or not the merchant is still trading.
If the retailer is no longer trading:
- Go straight to the credit card provider – either call them and say you would like to make a claim under Section 75 (they will usually send you a form to fill in) or log in to your internet banking locate the transaction in your account history and look for an option to “query this transaction” or similar.
- If the retailer has entered administration after you have paid for goods but before their arrival, you can still make a claim, based on an anticipated failure of the company to deliver.
- If you are making a claim because of a fault, the credit card company might ask you to arrange an independent report to verify the fault. If the fault is confirmed, it should refund you the cost of this as well.
If the retailer is still trading:
- You don’t need to go to the card provider straight away if the retailer is still trading – first, request a refund from the retailer in the usual way but stating that you are making a claim “under Section 75 of the Consumer Credit Act”.
- It’s only if this is declined or the retailer doesn’t respond that you should contact the credit card provider.
- If you have no luck going directly to the retailer, write to the credit card provider giving as many details as possible about the purchase: what you bought, when you bought it, from which retailer. Give receipts if possible and details of what went wrong, such as your goods didn’t arrive or were not as described. Also state that you have contacted the retailer and give details of its reply.
- If this refund claim is rejected by the credit card provider and you think the decision is unfair, you could make a claim with the Financial Ombudsman Service.
It’s important to note that time restrictions can apply to certain types of claim – in other words you may have a limited window in which it is possible to initiate the refund process (often 120 days). Although your card issuer may not be legally obliged to offer a refund after this point, depending on its policies, it may still consider your claim.
What is (and isn’t) covered by Section 75
- Items priced at more than £100, even if you paid for only some of it on credit card. So if you paid £30 on credit card but the item was for sale at £150, you are entitled to a refund of the full amount.
- Purchases in the last six years.
- Purchases made abroad or goods from abroad.
- Debit cards, charge cards, company credit cards and store cards.
- Items priced at less than £100 or more than £30,000.
- Purchases made via a third party, such as Groupon, PayPal or Amazon. The relationship has to be direct between the card holder and the retailer.
- Multiple items. The purchase has to be of a single item. So if you buy five festival tickets in one go and the event is cancelled because the organiser goes bust, you may only be entitled to a refund for one.
- If the purchase was made by an additional cardholder (such as your husband or wife) on your card, but was for someone else’s benefit, ie. a gift for a friend.
Credit card refund case studies
You bought flight tickets and the airline goes bust. You should be entitled to a refund from the credit card provider for the flights.
You buy a car for £8,000 and put the £350 deposit on your credit card. You are covered for the whole amount.
You buy a kitchen on credit but the doors are wobbly. You make a claim to the retailer but it refuses your request, saying the wobbly doors have been caused by your misuse. You make a claim to the credit card provider, which asks you to arrange an independent report. The report states that the wobbly doors are a manufacturers fault and the credit card provider agrees to issue you a refund.