For those not in the know, Section 75 is part of the Consumer Credit Act 1974. Although this section covers credit in general, for most it will come into play in relation to payments made by credit card. In short, S75 offers protection if you spend over £100 but less than £30,000 using a UK credit card, however it doesn’t apply in Eire.
The actual protection surrounds the following:
- Faulty goods
- Failure to supply goods
- Breach of contract
- Supplier insolvency
- Fraud
Prior to lodging a claim with your credit card provider you must have attempted to retrieve the funds yourself and failed, evidence of your efforts will be required. For simple claims it is quite possible that you can do this yourself, many card providers nowadays have online applications or downloadable forms to get the ball rolling. More complex claims may need the assistance of a regulated claims management company (CMC) or a regulated solicitor.
Should you require the services of a CMC or solicitor, the law states that claims of this nature must be handled on a no win no fee basis, at no time are upfront fees allowed.
The benefits
The major benefit is that using a credit card offers a potential route to claim back monies where other routes have failed because it holds the card provider as jointly and severally liable. This is completely different to say a debit card, here the Chargeback scheme is allowable, and again you must have taken steps to rectify the problem before instigating a chargeback.
In relation to Chargeback, you should make a claim as soon as you identify the problem or are concerned about a transaction. This is because your card provider usually needs to start the chargeback process within 120 days from when you made the transaction or when you were due to receive the goods or services.
S75 offers protection for a period of six years from the cause of the event or when you became reliably aware of the problem this is confirmed by the Limitations Act 1980. Just to confirm, chargeback is limited to 120 days.
Bank transfers or wire transfers should be avoided at all costs because there is no statutory protection if it all goes wrong, but there sort of is.
Part of the S75 legislation covers the entire purchase price. As an example, you buy a TV for £6,000 and pay £100 by credit card, the balance by bank transfer. In event of a claim, the card provider is jointly and severally liable for the entire £6,000, not just the £100 paid by credit card.
The pitfalls
Within the 1974 S75 legislation there is what is known as the DCS link, let us explain:
- Debtor – The card holder.
- Creditor – The card company.
- Supplier – The company or person you paid to do the job or supply goods.
This section is probably the main reason for S75 claims being rejected. Back in 1974 life was a lot simpler, you had a card, the supplier had a card machine, third party payment gateways hadn’t been invented or even dreamed of when the legislation came into being, so what is a third party payment gateway?
To keep it simple we will look only at PayPal. If you have and use PayPal to pay for a purchase then you are not paying the supplier. If whatever you purchased goes wrong it is the fault of the supplier, however, you didn’t pay the supplier directly, you paid PayPal, because of the legislation stating that there must be a clear link between the debtor, creditor and supplier, the link is broken by the third party, being PayPal. PayPal do have their own internal equivalent of a S75 claim but it’s not protected by law.
In a true example, there were two brothers; one was a carpenter, the other a plumber. One brother, the plumber had a merchant facility i.e. he could take credit cards. The carpenter brother was allowed to use his brothers’ facility; we guess you can see where this is going. The carpenter brother received a complaint and failed to rectify, upshot, the customer presented a S75 claim. The claim was rejected on the DCS grounds as the client paid a plumber, who had done nothing wrong, not the carpenter.
The DCS link is the only real downside but one which scam companies engineer to their benefit. Below we will look further into this.
Creating a DCS failure
Many timeshare scam companies employ a third party tactic. You employ and pay company A) to handle an exit or claim and it is they you sign the contract with. In their contract it states that their only job of work is to refer you to company B). When company B) fails to exit you from your timeshare you present a S75 claim. Your card provider will ask for evidence from Company A) who says they did what the contract says; they passed you to company B). If company B) let you down, then it’s not company A) at fault. Claim refused, very clever.
Enter the third party payment gateway. A not so ethical timeshare exit and claims company base in southern Spain proudly publish the following on their website:
So you can see that you are not paying the supplier but a third party, when it all goes wrong the DCS link may preclude a claim.
As an aside, note a 7 day cooling off period is quoted. As this company transacts most of its business online, this should read 14 days, interestingly, this is corrected in the company terms and conditions:
“Refund Policy
The client is entitled to a Refund within a 14 day cooling off period, all cancelations must be put in writing and posted to the below address or emailed to”
Obtaining a merchant facility is getting harder every day, fraud checks and other investigations such as capital adequacy make it hard for new or small companies to accept cards, this is why third parties exist.
Contract terms
We have already seen the company A), company B) wheeze, however there is another to be aware of and that is the timeframe clause. Many scam companies write into the contract a term covering the expected duration to carry out the work, often this is 12 to 18 months. You may find out fairly quickly that you have been scammed so start a claim; your card company will want to see all the evidence, including sight of the contract and are likely to suggest you start the claim again if work has not been carried out after the given timeframe.
Prevention is better than cure
Whilst S 75 is certainly a knight in shining armour it’s definitely not the panacea to all ills. Banks and credit card companies are not charity organisations and as such would rather reject a claim than uphold it. Your investigation, gut feeling and due diligence are the most important. Never be forced into making snap payment decisions, take time to evaluate and research. It’s all to simple to whip out the plastic card and with a wrong decision the money is gone in seconds, trying to get it back will present a significant challenge, that’s if you can get it back at all.
TCA comment
Doesn’t matter what you are paying for as long as it’s over £100; always use a credit card for at least part of the purchase. We are not advocating running up expensive extended credit debts, clear the card at the end of the month because this action does offer a great layer of protection.
As most timeshare scams are carried out at distance you need to be on your guard. Online banking either by PC or mobile can assist. Many systems allow for you to authorise payments or set the system to allow checks. If set, check the payee, if it doesn’t match with the supplier then beware. In a recent case we investigated, the company were based in Hull but the payee on the card statement was of an entirely different name and based in Brighton, immediately there is a DCS problem.
For the reasons stated above, never pay by wire such as Western Union and if the only method available is bank transfer, run a mile. Debit cards should also be avoided because of the relatively short 120 days to lodge a complaint.
If your claim is rejected there is one final path available, you have the right to refer your claim to the Financial Ombudsman Service but because of work load and understaffing it may take up to two years to receive a response.
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