Get a £2,000 refund from your credit card provider

Credit-card providers should refund us when a purchase goes wrong, but how does it work in practice?

If we buy a talisman with a credit card and it turns out not to make us as invisible as the salesman claimed, we're allowed to chase both the seller and the credit-card provider for our money back.

All purchases that cost between £100 and £30,000 are so protected, whether the cause is lies or exaggerations about a product, breach of contract, or the seller going insolvent before you receive your purchase. The card provider should refund us, even if we haven't taken action against the seller.

This protection, which comes from section 75 of the Consumer Credit Act, makes big purchases (be it through the Internet, overseas, in a shop or on the telephone) much more secure, and is a good reason to have a credit card.

Card providers don't always agree (or admit) they should refund us. When this happens,

Verbal misrepresentations and property agents

Mrs J had a time share in a holiday property she wanted to sell. She made a payment of £700 over the phone to a specialist agent. She said the representative had emphasised several times that she had a guaranteed sale, and Mrs J had understood there was a buyer lined up, and that the £700 was to meet the cost of the guaranteed transaction.

However, when she received the written contract, this was not the case. The seller refused to refund her and the card provider said it doesn't have to under section 75, because the misrepresentation was verbal not written.

Mrs J complained to the FOS, who said she provided credible evidence, including detailed handwritten notes at the time the phone call was made, and it saw no reason to doubt her. The FOS didn't agree that the card provider was not liable, so it ordered the provider to refund £700 plus £100 for the inconvenience it had caused Mrs J.

Deposits paid by card

Miss L paid a €5,000 deposit for a property in Cyprus from a developer using two credit cards. On receiving the contract she believed the terms had been misrepresented, so Miss L cancelled, but lost her deposit. The card provider refused to refund her.

The FOS rejected Miss L's claim. She had paid a deposit of €5,000, but the full price of what she was buying was €125,000, which is considerably more than the £30,000 protection limit offered under section 75. Therefore, she could not get the money back from the card provider under section 75.

Additional losses due to breach of contract

Mr M started making regular trips to France using a 'frequent traveller' ferry voucher. It cost £220 for ten crossings, which was cheaper than buying individually. After three crossings, the ferry company went bust. Mr M had to pay a different company £102 to get back from France. He then bought a six-trip ticket from the same company to replace the remaining six trips, which cost £192. His total costs were £294 for the seven trips that would have been covered by the original voucher.

The card provider said it would refund eight of the ten trips on its original voucher, totalling £174, which it described as 'more than generous', because 'the individual cost of the crossings bought with this voucher is less than £100, which is the minimum level for section 75 to apply'.

The FOS disagreed. It also said Mr M had made every effort to minimise his losses for the ferry company's breach of contract, so the card provider should refund him the full £294. It ordered £100 in compensation for the inconvenience caused by the card provider failing to accept the clear legal position under section 75.

Disappointment doesn't equal misrepresentation

Mrs B was disappointed when her new carpet was fitted, saying she had not expected it to look patchy in places from the sample she had seen, and that this was a 'a clear case of misrepresentation'.

The card provider disagreed and so then did the FOS. It was satisfied from the evidence provided that the carpet was not faulty and that it was a normal feature of this sort of carpet for the pile to appear to have variations in shade, depending on how each tuft, and the light, fell.

It said: 'Legally, a misrepresentation is an untrue statement of fact (which can be made by words or conduct) that causes someone to enter into a contract'. It did not agree the salesman had misrepresented the product by failing to 'warn' her, and so it rejected the claim.

Card provider fails to recover money from an airline

Mrs K paid £2,891 for return tickets to Florida for six people. A few days before they were due to return home, the airline went bust.

Mrs K paid £1,981 for new return flights and claimed it back from her card company. The card company refunded just £1,349, saying this is what it had recovered from the airline, and that the airline had said that sum: 'represented the portion of the original payment that was attributable to the return flight'.

The card company refused to reconsider, so Mrs K complained to the FOS. The FOS said it was clear from the evidence that Mrs K had paid a reasonable price for the new tickets. It said the card provider's liability is not limited to what it can reclaim from the airline and that it is liable for the additional costs she had reasonably incurred from the airline's breach of contract.

It ordered the card  provider to pay the full £1,981.

More: Here's a template section 75 refund letter to your card company. If that fails, here's how to complain to the FOS.

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