Section 75 of the UK Consumer Credit Act 1974 relates to the purchase, by credit card, of goods or services costing over £100 but no more that £30,000. The Act says that should the goods prove to be defective or the service not delivered, there will be an equal claim for compensation against both the seller of the goods or service and the finance company.
Section 75 Protection for Credit Agreements
Although most of the claims are to credit card companies, the law also applies to other types of credit agreements. For example, this might include a car loan as long as it’s covered under the Consumer Credit Act. This must be clearly stated on the documentation. Section 75 protection does not apply if goods are purchased using cash, debit card or a credit card cheque.
A judgment by the House of Lords in 1997 meant that despite opposition by some credit card companies, consumers now have Section 75 protection if they make a purchase abroad. This is still the case even if the goods have been purchased online, by mail order or by telephone.
What Happens if a Company Goes Out of Business?
If goods or services have been purchased from a company that has subsequently gone out of business, a person is still entitled to a full refund providing even a small deposit has been paid with a credit card.
Using a Credit Card to Buy Airline Tickets From a Travel Agent
Section 75 and the travel industry are a bit of a minefield for consumers. It’s always worthwhile therefore checking out what protection is available if a tour company or airline goes out of business, before a ticket or holiday has been purchased. For example, a claim under Section 75 cannot usually be made against the travel agent if the airline cancels the flight. This is because the travel agent is contracted to supply the ticket and not the flight.
Credit Card Refunds
If a purchase for goods or services is made using a credit card and these goods and services turn out to be faulty, poor quality or fail to be delivered, a claim can be made with the credit card company. However it’s best to initially write to the supplier or retailer and ask for a refund. If this does not work write to the credit card company, explain the problem, enclose copies of receipts and any correspondence with the retailer, and ask them for a refund under Section 75 of the Consumer Credit Act 1974.
UK Financial Ombudsman Service
The UK Financial Ombudsman Service offers some valuable advice. It says: “Section 75 does not, in itself, provide grounds for a claim against a supplier. Customers must have a valid breach of contract or misrepresentation under another law, such as the Sale of Goods Act or the Misrepresentation Act. If they do, then the have a ‘like’ claim against the card provider for the full amount of the claim.”
Sources:
Financial Ombudsman Service, Credit Cards – Equal Liability Under Section 75 of the Consumer Credit Act 1974, Ombudsman News September 2003
Martin Lewis, Section 75 Refunds, Money Savings Expert, 3 September 2008
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