Section 75- Consumer Credit Act how could Monzo offer this?

(Tim Banting) #1

The only reason I use a credit card is for section 75 protection. I would gladly give them all up as I pay off my outstanding balance in full.

I’m wondering if anyone has any creative ways in which Monzo could offer this sort of protection? Some sort of buyer protection scheme?

(James Wheatley) #2

Good question! Would be good to know what Monzo can offer.

Link here in case people want to look up Section 75:
https://www.which.co.uk/consumer-rights/regulation/section-75-of-the-consumer-credit-act

(If there's the wrong end of a stick, you'll find me holding it.) #3

They could offer a credit card. :wink:

(Tim Banting) #4

Or a Pot with an overdraft facility covered by Section 75?

(If there's the wrong end of a stick, you'll find me holding it.) #5

I don’t believe that debit cards are covered by section 75 whether or not an overdraft is in place

#6

Section 75 of the Consumer Credit Act by definition applies to things bought by credit (hence the name of the Act). Thus, unless Monzo started offering credit cards (or similar credit facilities) there is no way for Monzo to offer “Section 75 protection”.

Possible alternatives are: (1) Parliament could change the law, (2) Rely on Chargebacks, which Monzo already offers, just like (almost?) all other MasterCard, Visa and AmEx providers.

See here for the differences - both have advantages and disadvantages.


TL;DR:

Section 75

  • for credit cards (and some other purchases made on credit), as long as you paid directly to the merchant (e.g. not through PayPal)
  • statutory (i.e. your card provider is legally obligated to act)
  • minimum value is £100
  • Card provider is liable AS MUCH AS the merchant. As such you can make Section 75 claims years after the purchase.

Chargeback

  • for MasterCards, Visa and Amex cards (credit and most debit cards)
  • voluntary
  • minimum value is usually £10.
  • Works more like a “buyer protection”, i.e. if the merchant did something dodgy (e.g. didn’t send your item, forced DCC on you, you had a fraudulent transaction) you can claim within a reasonably short time after the transaction.
(Tim Banting) #7

Me neither- I was wondering if there is a clever way circumvent all the hassle with a Monzo credit card but still have the protection. :thinking::thinking:

(Hugh) #8

MasterCard offers better protection than legally required, kind of like Section 75 but not enshrined in law. I think there were a couple of posts on this a while back but can’t find them right now.

(Richard Bairwell) #9

Of course, the Section 75 is probably one of the reasons it costs merchants more to accept credit cards than debit cards (credit cards are usually around ~3-4% and debit cards ~20p or less for online from experience): provide protection/“insurance” for the card provider.

#10

It can also depend upon which industry you’re in. My rates were 1.85% for credit cards and £0.50 for debit cards for online payments.

(Kevyn) #11

This is the only reason I have PayPal Credit as that is applicable under Section 75 of the Consumer Credit Act so I can have protection with large purchases through PayPal (Credit).

#12

I know what you mean, but I don’t think that Mastercard charge backs are generally better than section 75. They have advantages, sure (especially that for section 75 each individual item must have cost £100 - £30k), but also disadvantages.

For once, Mastercard charge backs only apply to the amount you paid by card. If you buy a car, and put only 1p on the credit card, and pay the rest by different means, the credit card provider is liable for the whole thing under section 75, not just the 1p.

Another point where section 75 wins is this: imagine buying a PC. A few months after purchase it breaks. Your merchant and producer have gone out of business, or are just a pain to deal with (may be based abroad, and don’t speak English too well, or not subject to English law). Under section 75 the credit card provider is now liable. Under mastercard charge back, you most likely lost.

So, when it comes to “buyer protection” yes, I think charge backs usually win. But section 75 goes much further.

Finally, I think that the fact that section 75 is enshrined in law is a big win as well: makes it much more difficult for a provider to try and wiggle out of it…

But, yes, charge backs certainly have advantages as well. Which is why paying by credit card is great: you usually have both charge back and section 75 :slight_smile:

(Kevyn) #13

Its not entirely better as @nanos points out. A quick guide from MoneySavingExpert.

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(Allie) #14

The £10 minimum never applied to all reason codes, and was removed in the 15 October 2015 edition of the UK domestic rules.