The Clearsale Blog

If You Sell to the U.K., You Need to Know Section 75

If You Sell to the U.K., You Need to Know Section 75

If you’ve ever made a deposit on a big purchase only to have the merchant go out of business, or if you’ve ever ordered an expensive product that never arrives, you’ve probably been worried that you’re out the money you’ve spent. But United Kingdom consumers who used their credit cards in these types of scenarios don’t have to worry, thanks to Section 75 of the Consumer Credit Act 1974.

This regulation protects every U.K. consumer who uses their credit card to make purchases in which at least one item in the transaction costs between £100 and £30,000. Section 75 protects the U.K. consumer against breach of contract or misrepresentation of goods, regardless of the merchant’s location, the card issuer’s location, or the channel through which the purchase is made.

If you sell to U.K. consumers, no matter where your e-commerce business is located, here’s what you need to know about Section 75.

The Difference Between Chargebacks and Section 75 Claims

While the chargeback protections offered in the United States’ Truth in Lending Act sound like that of Section 75, they’re quite different in three important ways.

1. Purchase Amount

While chargebacks can be filed in the U.S. on any size purchase, Section 75 claims can be filed only when at least one item in the transaction has a price between £100 and £30,000. This means a purchase of two £99 items wouldn’t be covered, whereas a purchase of a £40 item and a £120 item would be covered.

Interestingly, deposits are also covered, so long as the item’s full price is within the £100 to £30,000 range. For example, a £50 deposit on a £400 mobile phone is covered under Section 75.

2. Time Limit

In the U.S., chargebacks generally must be filed between 45 and 180 days. Meanwhile, U.K. customers have up to six years (five in Scotland) to file Section 75 claims.

3. Responsible Party

In the U.S., merchants are held financially responsible for any transaction disputes. In the U.K., both the merchant and the credit card issuer share liability, and the customer can choose from whom they’ll request a refund.

However, even if the customer approaches the issuer for a refund, the issuer can still eventually recoup their losses from the merchant. Just as in the U.S., merchants may face stiff penalties and loss of revenue, the risk of losing their merchant account, and reputational damage from dissatisfied customers if they have too many Section 75 claims.

Are All Credit Card Transactions Subject to Section 75?

The good news is that not every credit card transaction puts merchants at risk. Five specific transaction types aren’t subject to Section 75 regulations.

Transactions Using Third-Party Payments

Alternate methods of payment — like Apple Pay, PayPal and other third-party payment processors — are not covered by Section 75. Why? Claims must have a direct link between the shopper, the retailer and the credit card company. Third-party payment providers invalidate Section 75 protections.

Note: The Financial Ombudsman Service, which settles disputes between customers and U.K. financial institutions, is looking into resolving this loophole.

Loans From an Issuer

Section 75 does not cover credit extended to a customer that isn’t directly tied to a specific purchase. So, if a customer withdraws cash from their credit card to make a purchase, the transaction isn’t protected.

Transactions Using Business Credit Cards

Section 75 covers only individuals, not businesses or organizations. Therefore, the regulation doesn’t apply to any transactions made with a business credit card.

Purchases Made by Secondary Cardholders

Purchases made by someone other than the main account holder are only covered if the primary cardholder benefits from the purchase.

For example, if an authorized user buys a gift for the main cardholder using the credit card, but the item arrives damaged or defective, the cardholder can make a claim under Section 75. But if the primary cardholders’ son uses the card to purchase something for himself, the transaction wouldn’t be covered.

Payments Via Other Methods

Purchases made with debit cards aren’t covered under Section 75, and neither are payments made by checks, prepaid cards or gift cards — really, any payment method that doesn’t operate under a credit agreement.

How to Avoid Section 75 Claims

While Section 75 is just a small part of the Consumer Credit Act, it’s an important one that can have serious consequences for e-commerce businesses doing business in the U.K.

Luckily, avoiding these claims isn’t impossible. To minimize excessive Section 75 claims, merchants should encourage customers to contact them directly if they have any problems with a purchase. This lets a merchant resolve the problem via a refund or replacement before the customer resorts to a potentially expensive chargeback or Section 75 claim. One way to encourage customers to get in contact is by ensuring refund, return and exchange policies and contact options are clear and posted in multiple places on an e-commerce merchant’s website.

Because customers have such a large window for filing Section 75 claims, it’s also important for every merchant selling to U.K. customers keep transactional details — including e-mail correspondence, proof of delivery and proof of download/use — for at least six years to defend against claims.

One last way to help minimize Section 75 claims is to contact one of the fraud prevention specialists at ClearSale. We’ve been helping companies worldwide increase revenue, minimize fraud and improve customer relationships for more than 15 years. Let us show you how we can help you, too.

ClearSale Fraud Protection Buyers Guide

You may also like

Ecommerce Platform Profile: VTEX

Ecommerce Platform Profile: VTEX

When it comes to ecommerce platforms, VTEX is an enterprise merchant favorite. Robust and multi-functional, VTEX is the platform of choice for powerhouse brands like WalMart, Coca Cola, and Sony...

How Enterprise Ecommerce Merchants Lose Revenue Fighting Fraud

How Enterprise Ecommerce Merchants Lose Revenue Fighting Fraud

When we first talk to enterprise ecommerce merchants about fraud protection, we’re often told they have their fraud under control.

And they do – but at what cost?

The reality is, many enterprise..

Turning The Clock Back on Fraud

Turning The Clock Back on Fraud

How will companies be able to get fraud to return to pre-pandemic levels as we ease back into something more resembling normal? Rafael Lourenco, EVP at ClearSale, give his take

How Your Ecommerce Site Search Impacts CX, UX and Fraud Prevention

How Your Ecommerce Site Search Impacts CX, UX and Fraud Prevention

The humble search bar.

It’s hard to believe that that one field on your website could make such an impact, but your ecommerce site search (and filter) holds a lot of power.

First and foremost,..

Global Markets Watch: 11 Post-Pandemic Ecommerce Markets to Track

Global Markets Watch: 11 Post-Pandemic Ecommerce Markets to Track

In previous years’ iterations of this post, we’ve pointed to data showing an evenly-paced growth trajectory.

But things have changed. Global markets are no longer focused on planning for..

New Fraud Prevention Issues for Retailers

New Fraud Prevention Issues for Retailers

Over the past year, merchants have experienced an increase in fraud volume as fraudsters employ new tactics to take advantage of businesses and consumers alike. At the same time, payments..

Germany: Ecommerce Fraud Risk

Germany: Ecommerce Fraud Risk

Ecommerce in Germany is maturing quickly—and catching up to some of the other more developed ecommerce markets in Europe. This is partly driven by the fact that Germans, in general, are early..

7 Best Practices Every Enterprise Ecommerce Merchant Should Know

7 Best Practices Every Enterprise Ecommerce Merchant Should Know

Many enterprise ecommerce merchants have been riding high on an increase in online sales over the past year. The flush of new ecommerce shoppers who naturally trust more recognizable brands has..

What can brands learn from the Facebook data leak?

What can brands learn from the Facebook data leak?

The data scraping attack that exposed 533 million Facebook users’ personal information may not seem like a problem for eCommerce brands. Much of the media analysis of the leak has focused on how..

Want to write
for our blog?

Please review our writers' guidelines
and then email with your pitch!

Subscribe to our blog