In December 2022, I used my Virgin Money credit card to pay £500 towards an £18,500 order for a large quantity of insulated concrete blocks. These were to be used in the self-build construction of my house. The rest of the money was paid by bank transfer.
Six months later, and before the blocks had been delivered, I was informed that the supplying company, Insul Hub, had ceased trading and was going into liquidation. I was told the company was “unable to meet existing obligations” to its customers.
As a result, I submitted a section 75 claim to Virgin Money. After 10 weeks of hearing nothing, I called Virgin Money, only to learn that the claim had not even been passed to a claims handler, and that there was no timescale for this to happen. I made a formal complaint but have heard nothing more.
It is now three months on and Virgin Money cannot (or will not) give me an estimate as to when they will look at the claim. In the meantime I am out of pocket by £18,500, which I was under the impression (perhaps falsely) that the section 75 process would protect me from. Can you help?
AH, by email
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Your case shows why it is so important to use a credit card when making big purchases for items yet to be delivered, particularly from small firms. Had you paid the whole sum by bank transfer, you would have lost the lot.
Section 75 of the Consumer Credit Act 1974 allows users to hold the card provider jointly liable in the event that a company fails to deliver items or if there is some other breach of contract. Consumers don’t have to buy the whole item using their credit card – they just have to spend at least £100 of the total sum on the card to gain the protection for the full amount. Users have to pay the company directly – not via an agent – and the total price can’t be above £30,000 to be covered.
That said, getting the banks to pay such claims is often a long-winded and slow process. Even after I sent Virgin Money your letter, it still took a further five weeks for the company to process it. Happily, this week the company said it had finally approved your claim and will refund you the full £18,500.
It has also made an extra payment to apologise for the fact that it failed to deal with your complaint in a timely manner. You are very relieved the matter is resolved and you are to get the money back.
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