Section 75 Guide
Every now and then we mention Section 75 with reference to the protection credit cards offer consumers, but what is it? Well, being the diligent money savers we know you are you’ve probably been reading up elsewhere on the intricacies of the Consumer Credit Act, but in case you haven’t (or you’ve only read what you want to hear) we’ve pulled together a quick Savvy Shopper guide to our favourite section.
What is Section 75?
Section 75 means that the credit card provider must protect any goods you buy for over the value of £100 completely free of charge because they have equal responsibility with the retailer. This law, implemented in the 1970s, applies when you spend between £100 and £30,000 on a credit card.
“75. — (1) If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor.”
Why does Section 75 exist (A history lesson)?
Prior to the enactment of Consumer Credit Act 1974, legislation covering consumer credit in the UK was disjointed and piecemeal. It focused on specific areas of credit and lending rather than taking a holistic view of the credit industry.
In 1971 Lord Crowther (fresh from advising the government to raise the school leaving age to 16) was commissioned to advice on UK consumer credit law. His Committee on Consumer Credit advised for the need of sweeping changes; the abolition of previous legislation and the harmonisation of credit legislation hence forth. As part of these reforms, and largely to protect against unscrupulous hire-purchase operators, “The Crowther Committee also suggest that defective goods bought under a loan agreement linked to purchase should become the responsibility of the lender.”
In presenting the bill to Parliament Baroness Phillips drew attention to cases highlighted by the Daily Mirror in 1973 where “…families had bought home freezers. Before these appliances were even delivered the firm supplying them had collapsed. The unfortunate clients then discovered that they were committed to pay for the next three years, under a moneylender’s agreement, for articles which they had never received.”
Despite the general election in 1974, the Consumer Credit Act passed quickly through Parliament thanks to support from both the minority Labour government and the opposition, coming into law on 31 July 1974 and we’ve had Section 75 ever since.
What can I buy?
Absolutely anything. It doesn’t matter whether you are booking a holiday, buying a computer, or ordering a new kitchen. As long as the value of the goods is between £100 and £30,000 and purchased using a credit card you should be protected under Section 75. However, sometimes it isn’t quite as simple as this as you will find out below.
When can I put Section 75 to use?
Technically, Section 75 can be applied when a supplier breaches the contract with the consumer, generally when they have failed to meet the Sale of Goods Act.
In times of economic uncertainty there are stories of companies going bust left, right and centre, particularly in the travel and holiday industry. However, if you are paying for your goods with a credit card, you don’t need to worry about losing your cash as the credit card provider have to give you a refund.
Section 75 doesn’t just come into use when businesses go bust, it provides the same legal protection if you have received faulty goods, they are not as described, or your goods have simply not been delivered. If the value of the goods was more than £100 and paid for with a credit card, the credit card company is equally responsible for the breach in contract as the supplier.
This amazing piece of consumer protection gives you the right to receive a refund within 6 years in England, Wales, and Northern Ireland, and 5 years in Scotland. What’s more, you don’t even have to have paid the full amount on your credit card to receive a full refund as part payments are covered by the Act.
For example, let’s say you buy a car worth £5,000, £10,000, or even £29,999, and pay the initial deposit on your credit card. If there was a problem with the purchase, or the company went bust, you could claim the full cost of the car under Section 75 even though you only spent £100 on your credit card.
Remember: always keep your receipts as well as credit card statements to make any potential claims easier.
Although credit card transactions are the most common things to be claimed back under Section 75, it does also provide protection for store cards, hire-purchase agreements, and in some cases other credit agreements such as car loans.
Since 2007 the same protection applies when goods have been purchased abroad as the House of Lords ruled that the Act did not have any limits on territory, and therefore goods from foreign suppliers would also be covered by Section 75.
What doesn’t Section 75 cover?
Although Section 75 of the Act might sound like a piece of protection that can make you invincible, it does rely on a direct relationship between you and the credit card provider. If there are any additional steps in the buying process, Section 75 might not apply. Here are some examples of when you might not be covered under the Consumer Credit Act 1974.
If you are using a payment system to complete the transaction (PayPal, WorldPay, Google Checkout) there is not a direct relationship between you can the credit card issuer. It is important to consider the likelihood of anything going wrong when adding a third party, as although PayPal does offer protection to its buyers, it is not as effective as Section 75. Using third party payment systems is not always a bad idea as they often offer additional protection for purchases under £100.
Booking a holiday is usually a huge expense and so is often booked with a credit card, but if you have paid for your trip via a travel agent you might not be covered under Section 75. In this situation the travel agents are classed as an obstacle between you and the credit card provider. If this has happened to you, it is worth checking out who owns the travel agent and whether you paid the airline directly or not. This information could give you a chance of claiming.
Additional Credit Cards
If you’ve got additional cards on your account for spouses, partners or children etc, the purchases they make might not be covered under section 75. If they have made a purchase that have faltered and you want to claim under section 75 you will need to demonstrate that the purchase provides a benefit to the you as the primary cardholder. So what is benefit? A lovely birthday present would probably qualify, but the pair of Jimmy Choo’s your daughter has bought for herself are unlikely to qualify (no matter how much joy you get from seeing her smile whilst she’s wearing them!).
Saavy Shoppers use Section 75!
So now you know the ups and the downs of Section 75 you should be a Saavyer shopper. Of course you need to follow the rules to get the benefits, but if you do it could be the best perk you’ve ever had. Happy Shopping!