How Section 75 of the Consumer Credit Act 1974 protects you
If you buy goods or services using a credit card or on a credit agreement and something goes wrong, you may have more rights regarding compensation than if you had paid with cash or a cheque.
This extra protection is given by Section 75 of The Consumer Credit Act 1974. It's especially useful if the supplier has ceased trading or won't help with your complaint. It's nothing to do with the temporary insurance for theft or damage which some credit card companies offer.
You can't claim more than you may be owed by the supplier but you can choose whether to claim from the credit company, the supplier or both.
When are you protected?
You get protection under Section 75 of The Consumer Credit Act 1974 if:
[* You paid by credit agreement or credit card. You still get it even if you choose to pay your monthly account in full rather than spread repayments over a period of time
[* the cash price of what you're buying is more than £100 and not more than £30,000
[* the amount paid using credit is £25,000 or less
[* if you made a credit agreement, the supplier of the goods or services introduced you to the finance.
When doesn't it apply?
You won't get the extra protection if:
[* You paid using a debit card, such as Switch or Connect, or a charge card, such as American Express, where you have to pay each monthly account in full.
[* You arranged the loan yourself, such as a bank loan.
[* The loan is a private agreement.
[* You have a Hire Purchase or Conditional Sale agreement. You can find out what type of credit agreement you have by reading the heading which should be at the top of the agreement. You may still have rights against the credit company but for different reasons.
How does it help you?
If goods or services have been misrepresented to you, or if there is a breach of contract, the credit company is liable to you in just the same way as the supplier.
In simple terms, it's a breach of contract if goods or services have not been supplied within a reasonable time, are faulty, not as described, or not to a reasonable standard. It's a good idea to get advice from Trading Standards if you're not sure whether there has been a breach of contract.
It is misrepresentation if you were induced into the contract by a statement of fact that turned out to be untrue. If the supplier is liable for the full amount of the contract then the same applies to the credit company regardless of how much you actually paid using credit.
However, if your credit card agreement dates from before July 1977, when this law came into force, any compensation offered by the credit card company is purely voluntary.
What do you need to do?
[* As soon as you have a complaint you should put your complaint in writing to the supplier.
[* Get two copies of your letter. Keep one for yourself.
[* Send the other copy to the finance or credit card company together with a covering letter which says that if you do not get satisfaction from the supplier you will look to the credit card company or finance company to compensate you under Section 75 of The Consumer Credit Act 1974.
[* If you have not already paid off the payment in question ask for interest on that amount to be frozen until everything is sorted out.
[* Get proof of postage from the Post Office - a free certificate of posting will do - and keep copies of all correspondence.
[* Send a reminder if you do not receive a reply to your first letter.
[* Be persistent but patient. The credit company will want to check that you have a justified claim. They'll try to get the supplier to resolve the matter first. This may all take some time.
[* Don't be put off if the credit company says they will only pay up if you take the supplier to court first and win your case.
[* Remember, if Section 75 applies, you can choose to sue either the credit company or the supplier or both together.
The advice given is the best available based on the evidence to hand. It is based on the understanding of current legislation and is subject to revision, should that legislation change. Only the Court can interpret statutory legislation.
For further advice contact:
Your Local (Council) Trading Standards Service
Details of which are online or in the local telephone directory.