Making a big purchase? The Consumer Credit Act 1974 could help
If you’ve ever bought an item on credit, you were being protected by the Consumer Credit Act’s Section 75 – even if you didn’t realise it.
This handy piece of legislation can give you peace of mind, which can be especially useful when you’re making large purchases.
What is Section 75?
The Consumer Credit Act 1974 states that your credit card company is as equally as liable as your supplier or retailer to reimburse your money if you do not receive the goods you paid for.
When can I use Section 75?
You can use Section 75 if the company you have used have gone bust, or if you do not obtain the service that you expected.
This is particularly important with larger purchases such as holidays or flights. If you’re looking into purchasing your summer holiday at the moment, make sure you’re aware of how the law can protect you if things go wrong.
What does Section 75 cover?
You’ll be automatically protected if you purchase goods or services that are between the value of £100 and £30,000. The law is in place to prevent individuals from incurring debt and therefore decreasing their credit rating.
This Is Money advise that the law “removes the risk that people could be put into debt for goods or services that weren't received at all, were faulty, or were otherwise not as described.”
Remember, you don’t have to pay for the whole purchase on your card, either. You will still get full protection, for example, if you paid £50 on cash and £100 on card!
As long as the value is over £100, you’ll be covered. However, the law gets more confusing when you buy two items which come to over £100 but each cost less than £100 respectively. For example – if your hotel stay costs £99, and the train tickets cost £80, despite the combined value exceeding £100, your city break trip will not be covered by Section 75.
What payment methods are covered by Section 75?
It must be stressed that credit cards are the only payment methods that are covered by this law, as they are the only type which can incur interest.
However, Section 75 only applies to traditional credit cards such as Visa or Barclaycard, and does not cover charge cards such as American Express. Debit Cards are not covered by this particular law; however, it may be possible to get some of your money back using a system called Chargeback.
Which? advise that chargeback covers “all debit cards goods, although exact rules may vary between the Visa, Maestro and American Express networks.”
What if I withdraw cash from my credit card to make a purchase?
If you withdraw cash with your credit card and purchase goods with this money, it will not be covered under Section 75. This is because part of the purchase, if only a small fraction, must be bought with a credit card in order to still be protected by the law. How do third party transactions affect my rights? Occasionally, you may choose to buy goods or services through a secure third-party payment service.
However, sometimes, this will not be covered by the law as it “breaks the chain of arrangements that must be in place between the consumer, the lender and the supplier.”
Money Saving Expert recommend that: “Technically there must be a direct link between the debtor, the creditor” “If that relationship is deemed to be broken by the involvement of an intermediary or third party, Section 75 protection won’t apply.” Individual claims will be looked at on a case-by-case basis by the Financial Conduct Authority.
How can I make a claim if I fail to receive a purchase?
Your first port of call should be to contact the supplier you used to purchase your goods. However, if the company is no longer operating, you should contact your credit card provider as it is equally as liable to resolve your issue. Make sure that you specify with your credit card company that you wish to make a claim using Section 75, so there is no confusion.
Where can I complain if a company refuses my claim?
If you are not able to resolve your issue with either your supplier or your credit card company, make sure you contact The Financial Ombudsman Service. They will be able to assess your issue and recommend what your next stage should be.