Your rights under Section 75
Under Section 75 of the Consumer Credit Act 1974, the credit card company is jointly and severally liable for any breach of contract or misrepresentation by the retailer or trader.
This means your credit card company is just as responsible as the retailer or trader for the goods or service supplied, allowing you to also put your claim to the credit card company.
You don’t have to reach a stalemate with the retailer or trader before you can contact your credit card provider – you can make a claim to both the retailer and credit card provider simultaneously, although you can’t recover your losses from both. This right is particularly useful if the retailer or trader has gone bust, or it doesn’t respond to your letters or phone calls.
Section 75 of the Consumer Credit Act also applies to foreign transactions as well as goods bought online, by telephone or mail order for delivery to the UK from overseas.
In general terms, Section 75 offers protection providing the amount spent via your credit card was above £100 with the overall purchase limit not exceeding £30,000. It’s the value of the goods you’re buying that is key – not the amount paid on the card.
For example, if you ordered a new sofa from a furniture store and paid a £200 deposit with your credit card and the balance of £600 by cheque, you would be covered for the whole £800 if the dealer went out of business and you didn’t get your sofa.
However, if you bought two items, that together cost more than £100, but each cost less than £100 individually, Section 75 would not apply and the card company wouldn’t usually be liable. Another example where section 75 would not apply is where you purchased goods for £150 and spread the cost evenly between two credit cards, because each amount is below the minimum £100 limit you would not be able to claim.
Remember that you can make a claim even if an account is closed and that Section 75 can apply to credit card transactions made abroad.
What if I paid by debit card or Paypal?
Section 75 of the Consumer Credit Act 1974 unfortunately only applies to credit cards and loans. There is the Chargeback scheme that can be used for debit cards; however it is not a legal requirement like Section 75. The scheme is formulated by Visa, MasterCard and American Express. Sadly, there is no guarantee you will get the full amount or any money back at all. In most cases, cardholders may only file a chargeback within 120 calendar days of purchase.
PayPal has its own payment protection scheme called PayPal Buyer Protection. In some circumstances you will also be entitled to claim under Section 75.
How can it help me? – What it covers
Section 75 covers various circumstances based on either a contractual breach or misrepresentation. Such examples would include;
- When you order or buy goods online, over the phone or mail order for delivery to the UK from another place in the UK or even overseas. If the goods fail to arrive or if they arrive in a different condition as to what was described when purchasing the product then you can claim.
- As well as section 75 covering costs, it also covers additional costs. Such as if you booked a holiday and the tour operator went bust while you were on the holiday you may be able to claim your money back plus any other monies you had to spend on covering other accommodation or flights.
- You can still claim even if your credit card account is now closed.
What does it not cover?
- Section 75 does not cover debit cards or cash withdrawals.
- The items or services you purchased have to hold the value of under £100 and no more than £30,000 limit.
- If you receive a faulty item that is still in warranty you cannot claim.
Possible complications
The most common reasons for banks to reject a claim; subject to the main criteria being met, would be if there was a break in the debtor, creditor and supplier (DCS) chain.
This would occur if you contract company AAA, paid company BBB the deposit but later paid company AAA the balance.
In this scenario; as per Section 184 of the Consumer Credit Act 1974, you will need evidence a clear association between company AAA and company BBB by common directorship, owner or certain relative or family relationship.
Another example of a potential problem would be the scenario where a small company does not have its own credit card facility but uses the facility offered by what is called a “Merchant Acquirer”. In this example you may have paid a builder for works (Bob the Builder) which were not carried out. Because he was a small trader he did not have his own credit card facility and collected his payments through a third party, the credit card company would argue that you cannot claim because you did not pay Bob the Builder directly, not an impossible objection to counter but a degree of expertise in section 75 claims would certainly be an advantage.
The other main objection is the 6 year statute of limitation. This will depend upon which ground you are presenting the claim.
If you are presenting your claim based on misrepresentation, such as mis-selling then the 6 year limitation period begins from the date of purchase, or if provable, the date you honestly became aware you were mis-sold.
If however you are presenting your claim based on a breach of contract, such as the contracted company going insolvent then the 6 year limitation period will begin from the date of the breach, i.e. the date upon which the company went into liquidation.
Please do not take the banks reason for rejecting your claim as gospel, in all cases you have the right to raise a complaint against your bank or credit card company´s decision with the Financial Ombudsman Service (FOS). This service is free of charge and their role is to investigate both arguments and seek an unbiased and amicable solution.
How can I claim?
If you find yourself in a situation where the seller will not provide you with a refund or has gone bankrupt, you may want to claim under Section 75. To do this you can act independently or employ the services of a Financial Conduct Authority (FCA) regulated Claims Management Company.
Claims Management Companies should work on a no-win no-fee basis and therefore will not charge you for their services until they have achieved a successful outcome. Therefore only once you have had the agreed refund amount paid into an account of your choice by your bank or credit company, will they request their service fee.
Whilst we attempt to remain independent we would strongly suggest that where matters of timeshare or holiday clubs and any other long term holiday products are concerned, our experience has demonstrated that many of these schemes were sold and set up on some very convoluted audit trails that the DIY approach to Section 75 claims will almost certainly fail. Our advice would be to seek professional assistance. Ok, there will be an expense but we are sure you will appreciate recovering any monies will be welcome against an out and out rejection from your credit card provider.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk