On this page
- What can consumers do when purchases aren't as expected?
- When do we get involved?
- Types of complaint we see
- Handling a complaint like this
- Information we will ask for when we receive a complaint
- What we look at
- Putting things right
- Further information on legislation
- Business Support Hub
- Information for consumers
- Case studies
Here’s information for financial businesses about our approach to problems with goods and services bought using a debit card or credit.
This page doesn’t cover issues with cars supplied under car finance agreements like hire purchase and conditional sale. Read our separate information about car finance agreements.
What can consumers do when purchases aren't as expected?
When a consumer buys goods or services from a supplier, things can go wrong. This could include an item being faulty or never arriving, the consumer not getting what they were expecting, or a service they bought not being up to an agreed or expected standard.
In many cases, as the bank or lender that finances the consumer’s purchase, you don’t supply the goods. But if they tell you about a problem, you should look at how you may be liable and how you can help.
If the consumer used a plastic card you provided, you might be able to help them get their money back through chargeback. This is a way of disputing transactions through the card scheme.
And if they paid using a credit card or loan you provided, you could be liable for problems with the financed goods and services. Section 75 of the Consumer Credit Act 1974 means you might have to help the consumer with a repair, replacement or pay them a full or partial refund.
If you supply the finance and the goods or services to consumers – for example, under a rent-to-own agreement like hire-purchase or conditional sale – then chargeback or Section 75 won’t apply. However, you might be liable for problems that arise with goods and services, and we might be able to help your consumer with a complaint about that.
When do we get involved?
We sometimes hear from consumers after they’ve experienced problems with goods or services. You may have explored using chargeback with them, or considered a claim under Section 75.
They might complain about your response to the problem with goods or services they told you about. Sometimes this is because they disagree with your answer. Other times, it’s because they think the process hasn’t been followed properly or handled well.
Types of complaint we see
We investigate complaints involving a wide range of goods and services. These include:
- tickets for events and travel
- cosmetic treatment
- home appliances
- building work
- educational courses
When consumers explain the problems that they have experienced with goods or services, they often say:
- I’m unhappy with what I was told about the goods or services before I agreed to buy them.
- Goods I paid for are of poor quality or defective.
- The services I paid for weren’t carried out with reasonable care and skill.
- I bought something that wasn’t fit for purpose.
- The item I paid for never turned up or the service I was expecting was cancelled and I didn’t get refunded.
- I’m unhappy with how the supplier tried to put things right.
- My purchase was cancelled or disrupted because of the Covid-19 pandemic.
- I bought a travel service that went wrong, or the supplier’s no longer trading.
If consumers aren’t happy with how their bank or lender responded to their request, they might tell us:
- My claim’s been unfairly rejected, with the bank or lender saying it isn’t liable for the quality of the goods or services.
- The bank hasn’t pursued a chargeback for me when it would have been good practice to do so.
- The bank or lender didn’t investigate my claim thoroughly or consider all the evidence.
- The bank or lender took too long to investigate my claim and/or made mistakes which had a negative impact on me.
Handling a complaint like this
We’ll expect you to work with the consumer to understand what happened, investigating fairly whether anything went wrong. Where appropriate, you should take steps to put things right.
Handling chargeback requests from consumers
You can read more detail in the dropdowns below, but here are some key headlines about what we’d expect to see when it comes to chargebacks:
- It’s often good practice to explore raising a chargeback even if the consumer doesn’t mention it when they contact you – and even if you think Section 75 applies.
- Chargeback rules are detailed and will likely not be familiar to consumers. You should explain the process clearly and outline what information you need – and the deadlines for sending it.
- If the supplier’s bank defends a chargeback, there could be grounds to take it further. You may need to ask the consumer for more information to improve its chances of succeeding. Explain to the consumer what information you want and give them clear time limits for providing it.
- If you’ve carefully checked the scheme’s rules and the information the consumer has given, you might decide that a chargeback isn’t the right thing to do in the circumstances. Think about how to explain that outcome to the consumer in a clear and straightforward way.
Chargeback only covers the amounts paid by card. If a consumer’s claiming further losses, then it would likely be good practice and more efficient to look at Section 75 at the same time as a chargeback.
If someone meets the scheme’s requirements for raising a chargeback, gives a consistent account and supporting evidence, and there’s a reasonable chance of success, we’ll usually expect you to raise a chargeback.
These are some of the problems with goods and services that consumers tell us about, which may be reasons for submitting a chargeback:
- The goods or services I got don’t match the description and I feel misled.
- The goods never turned up or the merchant never provided the service.
- The goods arrived but were broken or otherwise defective.
- The goods were defective, but I didn’t realise when I first got them.
- The merchant said it was processing a refund, but this never arrived.
- The goods or services were cancelled in line with the merchant’s cancellation policy and a refund hasn’t been credited.
Other reasons for chargebacks include disputes over the nature of the transaction, such as the amount charged or whether the payment was authorised. Find out more about our approach to complaints involving disputed transactions.
It’s important you understand the card scheme’s rules and its chargeback requirements.
The rules are lengthy. Consumers may not have access to them or know the right terms when telling you about a problem. You can help by clearly explaining the chargeback requirements. Let them know what evidence will help support their claim. It’s important that when requesting information, you tell them about any relevant time limits or deadlines so that you’re able to raise a chargeback in time.
Before you can start the chargeback process, the consumer may need to try sorting out any problems with goods or services with the merchant first. This is often a requirement of the card scheme rules. If you send a consumer off to do this make sure they are aware of the relevant time limits for coming back to you in order to raise a chargeback.
If a consumer can’t give all the information that you’ve asked for, look at the reasons why, and the information you do have. Then decide whether it’s still appropriate to raise a chargeback.
For example, a consumer doesn’t always have to give a copy of the terms and conditions. Or a consumer might not be able to prove that they contacted the merchant, for example if the merchant is unresponsive. In that situation, you should see if they were able to speak to them. In general, you should work out whether the information you do have is enough to raise a dispute.
Remember that the merchant may be able to give you more information about the consumer's claim and the goods or services they provided.
Throughout the chargeback process, it’s important to keep the consumer informed about the progress of the dispute.
During the chargeback process you might issue a temporary credit to the consumer. It’s important to communicate clearly why you have done this and warn that the money could be taken back if the dispute is unsuccessful.
Explaining the outcome of the chargeback to the consumer clearly, and the reasons for it, will help them understand the situation better.
Handling Section 75 claims for consumers
If you give the consumer a credit card or point of sale loan that they use to buy goods or services from a third party, the transaction could be covered by Section 75 of the Consumer Credit Act 1974.
Here are the headlines about what you may need to consider when looking at a claim or complaint involving Section 75. We go into more detail about the legislation, rules, good practice and processes in the dropdowns below.
- If Section 75 is relevant to a purchase, explore raising a claim even if the customer doesn’t mention Section 75 when they contact you. Remember that if a consumer is claiming for more money than they spent on the card, chargeback alone won’t cover this. You should consider Section 75.
- Before concluding that Section 75 doesn’t apply – for example because you think there’s no valid debtor-creditor-supplier agreement – double check how you’ve worked this out. Our Business Support Hub can answer questions about our approach and what we look at when investigating a complaint.
If Section 75 applies, it allows the consumer to claim for misrepresentation or breach of contract by the supplier. This means you should fully investigate what happened, which might involve getting evidence and information from the supplier directly.
Section 75 allows the consumer to make a claim against you for the actions of the third-party supplier. It could apply if:
- the cash price of the goods or services is more than £100 but no more than £30,000
- the consumer thinks the supplier misrepresented its goods or services, or that it breached its contract with them
It’s important to note that:
- The consumer doesn’t have to pay the full cash price of the goods on credit to have a valid Section 75 claim.
- In some situations where the cash price is over £30,000 a credit provider might still be responsible for what's happened under Section 75a.
- Independent of a Section 75 claim, a card provider or bank may be able to help in a dispute through the chargeback process.
- Even if a purchase is outside of the financial limits for Section 75, the consumer might still have a right to claim for misrepresentation under Section 56 of the Consumer Credit Act.
A debtor-creditor-supplier agreement needs to be in place for Section 75 to apply. Businesses will sometimes say they’re not liable for problems with goods and services, including where they decide that a debtor-creditor-supplier agreement doesn’t exist.
Common reasons given for saying there’s no debtor-creditor-supplier agreement are:
- The goods or services were for the use of someone other than the debtor.
- The credit payment wasn’t made directly to the supplier of the goods or services, and it went through a third party – such as a payment platform or an agent.
Assessing whether the debtor-creditor-supplier agreement is broken isn’t always straightforward. You need to have carefully and accurately considered the debtor-creditor-supplier agreement before declining a claim on this basis. Our Business Support Hub can answer questions about our approach and what we look at when investigating a complaint.
When considering Section 75 claims, it’s important to consider the wider picture. It’s not always as straightforward as saying Section 75 doesn’t apply. For example:
- Financial limits aren’t always obvious. At first glance it might appear that the consumer’s purchase exceeds £30,000 or is £100 or less. But look carefully at the cash price the supplier has attached to particular goods or services to get a clearer picture.
- Just because goods or services might benefit a third party, this doesn’t necessarily mean the debtor has no contractual agreement with the supplier – particularly if they’re named on the paperwork.
- If a third party appears to receive payment for goods or services, they might simply be processing the payment for the supplier. Such intermediaries don’t always mean that a Section 75 claim isn’t valid.
- If your customer’s card transaction shows a different name to the one the supplier has used on its contract, it doesn’t always mean that another supplier is involved. In some cases, the name is that of a payment processor, another trading name, or simply the name the supplier uses to accept payments. In our experience, you can clarify this by inspecting the contractual documents or enquiries with the merchant.
Consider the provided evidence carefully before concluding that Section 75 doesn’t apply. Our Business Support Hub can answer questions about our approach and what we look at when investigating a complaint.
If Section 75 does apply, then you’ll need to think about whether the supplier misrepresented or breached its contract with the consumer.
It’s important to consider all the available evidence and relevant law when working out whether you need to put things right. The consumer's testimony is important, along with written information and other evidence such as contracts, invoices, marketing literature, photographs, and videos.
When considering if there’s been a breach of contract, think about:
- what the contract says should happen and whether the supplier has done this
- what terms might be implied into the contract by the Consumer Rights Act 2015 or other relevant law like the Package Travel and Linked Travel Arrangements Regulations 2018
When considering whether there’s been a misrepresentation, analyse information given to the consumer at the point of sale and whether it was accurate.
When thinking about ways to put a breach of contract right, you should look at the relevant law, like the Consumer Rights Act 2015.
It might be right to arrange a repair or replacement of goods, repeat performance of a service, or to provide a full or partial refund. It might also be appropriate to pay the consumer for consequential losses resulting from the issues they’ve experienced with goods or services.
If you think there’s been a misrepresentation, it may be right to put the consumer back in the position they would’ve been had it not occurred. You might treat the contract as cancelled, refunding the consumer in full for the goods or services. But that might not be practical in some cases, so you may need to consider another way to resolve the situation fairly.
Regardless of the outcome, you should keep the consumer updated and explain things clearly – including what further information you might need, why and when you need it by.
Situations where you supply the goods or services and the finance
There are times when chargeback and Section 75 may not apply, for example when you’ve supplied the goods and the finance too.
But in those situations, you’ll still sometimes be responsible for problems, depending on the type of agreement. This could be under rent-to-own type arrangements, like hire purchase.
You could be responsible for:
- issues arising from the supply of the goods or services
- what was said about the goods or services before sale by a third party, such as a dealer or broker, that turn out to be incorrect
When a consumer says they’re experiencing problems, it’s therefore important that you’re aware of your responsibilities under the contract and consumer law.
Information we will ask for when we receive a complaint
Once a complaint has been referred to us, we will ask you to provide information about your side of events.
The typical information we would normally expect to see for this type of complaint includes:
- account statement showing the transaction involved in the chargeback or Section 75 claim
- a copy of the contract with the supplier or invoice including the price, a clear description of the goods and/or services and the length of the contract
- the dispute form completed by the customer when raising the claim and/or responding to information requests including all evidence provided such as receipts, booking confirmation, photographs, inspection reports
- if the transaction was by credit card or a point of sale loan, reasons for the Section 75 claim outcome or why it wasn’t considered
- any further information relied on, for example terms and conditions from merchant’s website, contact with other parties including the supplier or experts
- contact notes which include call notes where claim was lodged by phone
- correspondence with the customer about the claim including information requests and claim outcome emails/letters
- comments on relevant law, such as the Consumer Rights Act 2015, and what industry guidance says about the supply of goods or services
- for Section 75 complaints – full details of all relevant parties in the debtor creditor supplier agreement
- chargeback submission, if processed, showing chargeback condition used, merchant defence and card scheme arbitration decision
- if chargeback wasn’t processed at all or it wasn’t continued following merchant defence, the reasons for this
- confirmation of card scheme, for example Visa or Mastercard, if that isn’t clear elsewhere
We may ask for further information or documents, depending on the circumstances of the case.
Read more about how we handle complaints. We also have a tool you can use to check the information we need from financial businesses.
What we look at
We’ll look at all the circumstances, including evidence provided by you and your customer. We’ll consider how you’ve handled the consumer’s problem with the goods or services, taking into account the law and good practice including:
- the provisions of any relevant chargeback scheme
- your responsibilities under Section 75 of the Consumer Credit Act 1974
- relevant consumer protection law such as the Consumer Rights Act 2015
When considering how you handled things, we’ll look at:
- the type of credit used, the cost of the goods or services and who was involved in the transaction
- what all the parties have said about the goods or services in question, examining the contract with the supplier
- evidence such as testimony, paperwork, photos, videos, correspondence and – if needed – reports or expert opinion
- what relevant law, chargeback scheme rules and industry guidance say about the supply of goods or services
Putting things right
Depending on what's gone wrong and what you've done to try and put things right, we may ask you to:
- give the customer a refund, either in part or in full
- repair or replace the goods
- arrange for the services to be carried out properly
- refund interest, charges or repayments
- collect the goods at no cost to the customer
In any of these situations, we may also suggest you pay compensation for any distress or inconvenience that might have been caused. If the customer has incurred any costs relating to the problems with goods or services, we'll consider whether it's reasonable for you to reimburse these costs.
Further information on legislation
The Consumer Rights Act 2015 is relevant to complaints about the quality of goods or services – including digital content – supplied by a business to a consumer. It implies certain contractual rights into consumer contracts – even if the supplier's paperwork doesn’t include them, or specifically tries to exclude them.
It clarifies the supplier’s responsibilities and explains the rights a consumer is entitled to. Key protections are:
- goods must be of satisfactory quality, fit for their intended purpose and as described
- services should be carried out with reasonable care and skill, and if not specifically agreed, in a reasonable time frame and at a reasonable cost
The Act also sets out the consumer's rights in the event of a breach of contract, including their right to:
- a repair, replacement, or rejection of goods, or partial refund for problems with goods
- have services attempted again, or receive a full or partial refund for those that have already taken place
Not all contracts for goods and services are covered by the Consumer Rights Act 2015, such as business-to-business contracts. There could also be other regulations or law that you need to look at in addition to the Consumer Rights Act 2015.
Other legislation that might be relevant, instead of or in addition to the Consumer Rights Act 2015, include the:
Business Support Hub
If you want to talk informally about a complaint you’ve received, you can speak to our Business Support Hub. They can give general information on how we might look at a particular complaint. They also offer guidance on our rules and how we work.
Find out how to contact our Business Support Hub.
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