Choose Guide to Section 75 of the Consumer Credit Act

By Claire Stevenson Staff Writer Sunday, 12 April 2009

Golden rules to remember Section 75 cover requirements If you're claiming against your card issuer, the purchase must have cost between £100 and £30,000. There must be a clear relationship between the credit card company and the supplier - no third parties can be involved. You can still claim if you part-pay using a credit card. If you pay using a Visa debit card, you can still get some protection from its Chargeback facility, but only on purchases that cost less than £100. You can claim if the supplier has gone bust. You can claim if the supplier hasn't gone bust as long as you can prove there has been a breach of contract or misrepresentation. If the card company is no help, you can always uphold your complaint with the Financial Ombudsman (www.financial-ombudsman.org.uk ). Related Personal Finance Features and News See our other recent related news stories: Section 75: Don't accept any excuses Section 75 complaint increases and claim messages by the Financial Ombudsman Service are covered in this week's money news roundup with Julia Kukiewicz. Be covered this summer with a travel insurance credit card With Travel Accident Insurance being exposed for the crock of baloney it really is, is it still possible to get real travel insurance from your credit card? The 5 Things you Should NEVER do with your Credit Card Make sure that you avoid Julia Kukiewicz's top five credit card mistakes with this simple guide to make your card a credit to you.

SECTION 75 offers consumers protection on purchases that are paid for via a credit agreement. This clause of the consumer credit act allows you to reclaim lost money from the purchase of non-delivered, faulty or mis-sold goods or services.

Read on to find out what purchases are covered, how you can claim, what to do if you can't get a credit card and more.

What is the Consumer Credit Act 1974?

The Consumer Credit Act 1974 is a piece of legislation that regulates consumer credit and hire agreements and the content of such agreements. Under the Act, businesses lending money or offering goods or services on credit must be licensed by the Office of Fair Trading (www.oft.gov.uk ).

The Consumer Credit Act offers protection to credit agreements between traders and individuals.

What is Section 75 of the Consumer Credit Act?

Section 75 of the Consumer Credit Act contains information enabling people to take action against credit providers in breach of contract.

The most common breach occurs when a firm has agreed to provide a consumer with goods or services on credit but then fails to supply those goods or services. Goods that arrive in a faulty condition or that are not as described or otherwise mis-sold are also covered.

Under Section 75, the creditor (this can be a credit card company) is held equally liable for breaches by the supplier - even if that supplier has failed to fulfil an order because they have gone bust.

As the Financial Ombudsman Service has recently publicised [see: Choose money news roundup], you have a right to be refunded if you make a claim within 6 years (5 in Scotland) and that the claim is dependent on the bank, not just the company you buy from.

What purchases are covered under Section 75?

The beauty about Section 75 is that it covers more than just full payment credit card transactions:

• Your credit card company must cover purchases which cost between £100 and £30,000.


• Even if you partly pay for something with a credit card, your card company will still have to stump up.


• Got a store card? Section 75 applies to those too.


• If you buy anything on hire-purchase agreements, you're also covered.


• Other credit agreements - such as a car loan through a dealer - are covered too, if the agreement states words such as 'This agreement is covered by the Consumer Credit Act 1974' or has similar wording.

What's more, it doesn't matter whether you're buying a piece of furniture or airline tickets. If the furniture doesn't show up, you'll be covered. If the airline you're flying with goes down the drain (remember the XL fiasco last summer?) - yep, that's right - you're covered.

So what ISN'T covered under Section 75?

This is where it gets a little complicated. For a start, only credit and store cards are covered - your debit card isn't and neither are credit card cheques as they can be made out to anyone.

Likewise, if you pay by normal cheque or by cash, they're not included in Section 75's protection remit.

Importantly, Section 75 doesn't apply to third party transactions. If you're wondering what these could be, here's a helpful round-up:

• PayPal, Google Checkout and WorldPay are examples of third party transaction processors. Even if you pay for something with your credit card, you're unlikely to be covered under Section 75 because in this instance there is no direct relationship between the credit card company and the supplier.


• If you buy a holiday via a travel agent and they're simply acting as the middle man, again you lose out. But in instances where they are the tour operator and are selling you a holiday directly, you should be covered. See! Told you it got complicated!

Can I get Section 75 purchase protection if I can't get a credit card?

If you've got a bad credit rating, you might have been refused a credit card when you applied to a lender. But if you want the peace of mind that Section 75 offers, you can still get it under the following schemes:

• The CashPlus Prepaid MasterCard. It's a pre-pay card, meaning you have to load it with cash in order to spend on it. If you're looking to repair your credit rating, this card enables you to do just that with its Credit Builder facility. If your credit rating is fine you can opt for the card's FlexiPlus option, which requires a top-up every four months.


• Visa's Chargeback. If you have a Visa debit card you're in luck as this card giant has its own Chargeback facility. This simply means that the bank that has supplied you with a Visa debit card - the issuing bank - can regain the value of a payment made using a Visa card from the supplier's bank to pass back to your own account. However, Visa chargeback only covers purchases that cost less than £100.

Can I get any protection on a purchase that costs less than £100?

Perhaps surprisingly, you can. And again, this is down to Visa and its Chargeback rules. If you've paid for a purchase costing less than £100 and you've used a Visa credit or debit card, you stand a chance of getting reimbursed with Chargeback if the goods don't show up or the firm you buy from goes bust.

So how do you claim using Chargeback?

• Here it's important to remember that the onus is on you to raise the problem as early as possible and not more than 120 days after you first noticed it.


• Contact your bank and tell them you'd like to question a payment. They can then contact the supplier's bank to initiate the Chargeback process.


• It's in your banks' own interests to try and reclaim the money from the supplier's bank. After all, the supplier's bank hasn't gone bust - the supplier has.


• All banks that issue Visa cards have agreed to process any Chargeback requests too, so bear this in mind when you want to claim using the process.

What should I do if something I buy is faulty or not delivered?

Keep a cool head and set the wheels for claiming under Section 75 in motion. Even if the supplier or retailer hasn't gone bust, they are in breach of contract if, for example, they've supplied the wrong item or it breaks in transit. The following tips should help you pursue a claim:

• You must first of all establish the breach of contract, such as non-delivery of goods or goods arriving faulty. This is because Section 75 itself doesn't provide the grounds for claiming against a supplier. These are established under separate consumer law such as the Sale Of Goods Act 1979


• Next, contact your credit card supplier or issuing bank, and not Visa or MasterCard. So whether it's an Egg credit card or Barclaycard credit card or one from a different bank, contact Egg, Barclaycard or whichever bank it is.


• Ring the credit card issuer and explain your problem, telling them politely but firmly that you want to make a claim under Section 75 of the Consumer Credit Act. They should send you out a claim form for you to proceed with the claim.


• Sometimes you might encounter a clueless call centre operator who doesn't really understand what protection Section 75 offers the consumer. "That's not our business, you need to chase that up with the retailer/supplier" is a common response.


• Well actually it is the card issuer's business. Again, a polite but firm attitude is all that's needed. Tell them you have a legal right to make a claim as the credit card firm is equally liable. Bear in mind though, that sometimes it is easier to go to the retailer as they can offer quicker redress than a credit card company.


• Any other problems, or if your credit card company won't help, contact the Financial Ombudsman.

What if the supplier has gone bust?

Don't panic. And don't listen to the credit card company if they say that you have to take court action against the supplier. You don't. Remember - the credit card company is equally liable. And going to the credit card company is your only option in this case. When a supplier or retailer has gone bust, the case for redress is a bit more straightforward:

• Again, ring up the credit card supplier and tell them you're making a claim under Section 75 of the Consumer Credit Act. They should send you a form to proceed with the claim.


• If they try to fob you off with any excuses as to why they can't help, you should tell them that the credit card company is equally liable for claims. Simple!

Can I just claim back the purchase price?

No. You can claim for more than that! Section 75 allows you to claim for the credit card transaction and any associated losses associated with the breach of contract. You can also still claim if you've part-paid for something with a credit card. So you can claim for:

• Other costs associated with the loss. So if you've had to pay for something as a consequence of not getting your original purchase, you should be able to claim for the consequential purchase too. So if you've bought flight tickets and are abroad when the airline suddenly goes bust, and you have to pay for a ticket home, you should be able to claim for this extra purchase.


• You can still claim against a credit card issuer if you part-paid for goods on your credit card and settled the rest on a different card (debit, credit, cheque or cash). So if you buy a TV and stick a deposit on one credit card then pay the balance off on another credit card, you can claim back the whole amount and any consequential losses from either the first credit card firm, the second one, or the TV supplier.