Section 75 claims and connected lender liability

Section 75 of the Consumer Credit Act 1974 creates one of the strongest consumer protections in UK financial services. It makes a credit provider jointly and severally liable with the supplier for any misrepresentation or breach of contract relating to a transaction financed by a debtor-creditor-supplier agreement. In plain terms, if a consumer pays for goods or services using a credit card and the supplier fails to deliver, delivers faulty goods, or misrepresents the product, the consumer can claim against the credit card issuer as well as (or instead of) the supplier.

For credit providers, Section 75 creates a significant financial exposure. Understanding exactly when it applies, what triggers a valid claim, and how to handle claims efficiently is essential for managing both costs and regulatory expectations.

How Section 75 works

Section 75(1) states that if the debtor (borrower) has a claim against the supplier for misrepresentation or breach of contract, they have a like claim against the creditor (the credit provider). The creditor and supplier are jointly and severally liable. This means the consumer can pursue either or both, and can recover the full amount from the creditor without first pursuing the supplier.

The financial thresholds

Section 75 only applies where the cash price of the single item (or single transaction) is more than GBP 100 and not more than GBP 30,000. These are statutory thresholds set in the CCA and apply to the price of the individual item, not the amount charged to the credit card. A consumer who pays a GBP 200 deposit on a credit card for a GBP 5,000 sofa has full Section 75 protection for the entire GBP 5,000, even though only GBP 200 was paid by credit card.

Items priced at GBP 100 or less are excluded. Items priced over GBP 30,000 are also excluded, though the consumer may still have rights under the unfair relationships test (sections 140A to 140C) or general contract law.

Which agreements qualify

Section 75 only applies to debtor-creditor-supplier (D-C-S) agreements. This is a specific legal category defined in sections 12 and 13 of the CCA. A D-C-S agreement exists where there is a pre-existing arrangement or contemplated future arrangement between the creditor and the supplier, or where the creditor and the supplier are the same person.

In practice, the most common D-C-S agreement is a credit card transaction. When a consumer uses a credit card to buy from a retailer, the card issuer has arrangements with the retailer (through the card network) that make this a D-C-S agreement.

What does NOT qualify for Section 75

Several common payment methods and credit types fall outside Section 75. Misunderstanding these exclusions is a frequent source of consumer complaints and operational confusion.

• Debit cards: Section 75 does not apply. Debit card transactions are not credit agreements. Consumers may have chargeback rights through the card scheme, but this is a voluntary process, not a statutory right
• Buy Now Pay Later (BNPL): Current BNPL products are structured as exempt agreements and do not create D-C-S relationships that engage Section 75. Even after BNPL regulation from 15 July 2026, the government has confirmed that Section 75 will not apply to BNPL agreements
• Charge cards: Cards where the full balance must be repaid each month (no revolving credit) are not regulated credit agreements under the CCA and Section 75 does not apply. However, some charge card issuers voluntarily offer similar protections
• Commercial credit cards: Cards issued to businesses (not individuals) for business purposes are not consumer credit agreements
• Debtor-creditor agreements: A personal loan used to buy goods is a debtor-creditor (D-C) agreement, not a D-C-S agreement, so Section 75 does not apply. The loan has no direct link to the supplier
• Items under GBP 100 or over GBP 30,000: Outside the statutory thresholds
• Payments through intermediaries: Where payment is made through a payment intermediary (such as PayPal) rather than directly to the supplier, there is legal uncertainty about whether a D-C-S relationship exists. Court decisions have been inconsistent on this point

Section 75 vs chargeback

Section 75 is frequently confused with chargeback. They are fundamentally different mechanisms, though both can help consumers recover money.

From a credit provider's perspective, Section 75 claims are typically larger and harder to defend than chargebacks. The statutory nature of Section 75 means you cannot contract out of it, and the burden of demonstrating that a claim falls outside scope rests with you.

Handling Section 75 claims in practice

When a consumer makes a Section 75 claim, you should follow a structured process to assess validity and respond within regulatory timeframes.

Validating the claim

1. Confirm a D-C-S agreement exists: Was the transaction paid (in whole or part) using a credit card linked to a regulated credit agreement?
2. Check the thresholds: Is the single item price above GBP 100 and not more than GBP 30,000?
3. Identify the claim basis: Is the consumer alleging misrepresentation or breach of contract by the supplier?
4. Check limitation: Was the breach within the past 6 years?

Investigating and responding

If the claim appears valid on its face, investigate the underlying complaint. Contact the supplier where possible to obtain their account. You must treat the claim as a formal complaint and respond within the FCA's complaints handling timeframe (8 weeks for final response, or earlier acknowledgement if you need more time).

If you reject the claim, provide clear reasons and inform the consumer of their right to refer the matter to the Financial Ombudsman Service. The FOS regularly adjudicates Section 75 disputes and tends to take a consumer-friendly approach to borderline cases.

Supplier indemnity

Section 75(2) gives the creditor a right of indemnity against the supplier. If you pay out on a Section 75 claim, you can seek to recover the amount from the supplier. In practice, enforcement depends on the supplier's solvency and your commercial relationship. Many card issuers include indemnity provisions in their merchant agreements to facilitate recovery.

Managing Section 75 exposure

Credit providers can take practical steps to manage their Section 75 exposure without undermining consumer rights:

• Merchant due diligence: Assess the financial stability and complaint history of merchants before onboarding. Merchants in sectors with high complaint rates (travel, events, home improvements) present higher Section 75 risk
• Indemnity agreements: Ensure merchant agreements include clear indemnity provisions covering Section 75 liability
• Claims handling processes: Establish efficient processes for validating, investigating, and resolving claims. Delays increase FOS referral risk and regulatory scrutiny
• Data and monitoring: Track Section 75 claim volumes by merchant category to identify emerging risks early

Where to go from here

• For debt collection and default notice requirements, see Comply with debt collection rules
• For the broader regulatory framework, see Understanding UK consumer credit regulation
• For FCA authorisation requirements, see FCA consumer credit authorisation