Posts Tagged ‘section 75’


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.

Third parties

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.

Travel agents

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!

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2011 proved to be a difficult time for many people financially, and with the economy unlikely to improve any time soon, getting the best value for money will continue to be top priority for most in 2012. Given that January is traditionally the time of year we start to flick through holiday brochures and dream of distant (warmer) lands we thought we’d investigate how to get the biggest bang for your Buck (or Euro etc). Where to go, how to get the best deals, when should you book, what type of holiday to go on and whether any other saving techniques are worthwhile.

Where To Go
Spain has been the UK’s favourite holiday destination since the rise of mass tourism in the sixties, it’s beaches, resorts, close proximity, and cheap deals are just some of the reasons that we keep going back year after year. However, as the pound has struggled against the Euro (making European travel more expensive) it is has fared slightly better against some other currencies, meaning there have been significant drops in prices on long haul destinations.

The Post Office carried out a Long Haul Report in 2011 which found that the costs had fallen most in Sri Lanka and are actually 30% lower than the previous year. The research compared how much a ‘basket’ of 10 items would cost in 28 different countries. Sri Lanka faired the best at just £31.81, runner up Thailand at £51.48, but Hong Kong proved to be most expensive at £132.06 although this is 11% lower than the 2010 report.

Other destinations which give a surprisingly big bang for your buck are the Caribbean Islands, Mexico, Argentina, Florida and Egypt. It may be hard to leave your sangria behind but why not experience something a little different for a lot less cash?

When To Book
Do you remember the days of your parents sitting in front of Teletext searching for last minute deals on holidays, panicking when the page turned and you had forgotten to hold? I certainly do, and whilst it may not be quite the same experience these days, last minute holidays can still be discovered.

Websites have been set up specifically to offer these cheap deals (lastminute.com and latedeals.co.uk). However, in recent years we have seen marked benefits to booking early. Travel firms are replicating the business models used by low-cost airlines and hotel chains – They cover their costs with cheap early bird offers and making their profits on less decisive customers. By getting in months, or even a year in advance, you could be bagging all sorts of bargains such as buy-one-get-one-free weeks.

Does this mean there are no nail-biting last minute bargains? No. The truth is that both do exist and whether you book earlier or later will depend on your personal circumstances. For example, if you need to get your annual leave in at the start of the year, you would probably not get away with booking a few days prior to the flight.

The most important thing is not to book when Jo(e) Average books. If you are looking to save some cash an early bird booking needs to be at least nine months in advance, whereas a last minute deal needs to be left until around eight weeks before departure. The time in between these periods is more likely to be the most expensive.

What To Choose
Choosing the type of holiday you go on has always been a bit of a dilemma, as all-inclusive packages give you the freedom to eat and drink all you desire for two weeks of bliss, but they can end up costing an arm and a leg. Alternatively, you could just opt for self-catering, where you are responsible for all your own meals.

At the time of booking this sounds like a bargain, but depending on your holiday destination you could end up shelling out more than the cost of an all-inclusive holiday.

If you are thinking about self-catering or half-board it’s a good idea to research the cost of living in the local area. Sri Lanka would prove to be a bargain, whereas Hong Kong could prove very costly.

That said be sure you like the local cuisine if you want to cut costs with self catering. Anything imported is likely to be expensive local staples are likely to be the cheapest. Oh, and if you can’t live without a fry-up every morning – Go All Inclusive!

Where To Buy
If you are a regular internet user there are all sorts of possibilities open to you that could potentially provide you with even more savings on your bargain holiday. Cashback websites such as quidco.com and topcashback.co.uk have become increasingly popular in recent years. The idea of these websites is to provide the customer with ‘cashback’ from the commission they earn for referring any customer.

Quidco, which was ranked as the number one cash back website by the Daily Telegraph is very simple to use and can save consumers a fortune if used well. The savings don’t end there either, Quidco can be used to save on suitcases, swimwear, activities, and car rentals, allowing you to free up your cash for holiday spends.

Be sure that you are comparing the final price though – It’s easy to get blinded by the promise of cashback and forget that you’re paying more just to get the cashback.

How To Pay
No matter how much money you’ve saved on your holiday through our tips it’s still likely to be one of the most expensive purchases you make this year which means you ought to be using a credit card to pay. This is due to the cover that you get as a result of Section 75 of the Consumer Credit Act.

It’s always tucked away in the small print but the nuts & bolts of it are that if you spend more than £100 on a single purchase, using your credit card means the card issuer (ie. The bank) is equally liable to refund you should anything go wrong. It’s the kind of cover we get sold as an add-on, but it’s standard for credit card purchases and with the economy still looking volatile it’s not worth the risk of not using a credit card.

Happy Holidays!
Hopefully with these tips you can avoid sharks; save and relax on your 2012 holiday.

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Let’s face it, Christmas can be an incredibly expensive time, and often a time that our wage packets are unable to handle. In order to prepare for your purchases over the holiday period, you might be looking to apply for a credit card.

Everyone enjoys doing their Christmas shopping in their own way; you could be incredibly organised and have everything bought and wrapped by November, but most of us do it in early December, and inevitably leave some of it until the last minute.

However, with just 35 days  until Christmas Day, you will need to start thinking about applying for your new credit card so that it arrives in time for you to use it for your Christmas shopping.

Of course, there are several different types of credit card available and some take longer than others to arrive due to the way the card application process is handled.

Some credit cards are what’s known as ‘instant decision credit cards’ and they pretty much do what they say on the tin – you apply for the card online and the credit card company comes back to you with its decision within a couple of minutes, unless they need more information from you in order to make the final decision.

Cards that don’t offer an instant decision can take around 7 calendar days to get a decision to you.

Either way, you will still need to sign a credit agreement (some issuers allow you to do this online using a digital credit agreement), and wait for the card and PIN to arrive in the post so it is important that you apply now.

Here are the application deadlines for our top eight Christmas credit cards and have been calculated on the basis that you wish to receive your cards by 5th December, for those organised Christmas shoppers or 18th December 2011, for those who like to leave their festive shopping until the last minute.

It is important that you compare the credit cards available to you before applying to make sure that you choose the one most suitable for your needs (you should only make one application for credit at a time or it will make you look like you are desperate for credit and put off prospective lenders). To ensure that you receive your Christmas credit card in time for you carry out your festive shopping you should apply in plenty of time and account for any potential problems with the application.

Christmas 2011 Credit Card Application Deadlines Table

Types of credit cards

The way in which you plan to use your Christmas credit card, combined with your credit rating, will affect the credit card you should apply for. Listed below are definitions of the different types of credit cards:

Instant decision

Instant decision credit cards provide many applicants with the result of their application within 60 seconds online. However, these results are not always instant if you do not meet exact criteria. If it is harder for the lender to judge your application, this decision will be delayed. These can be ideal for last minute Christmas shoppers as they are more likely to arrive in the nick of time.

0% purchases

Many credit cards offer customers introductory offers and deals to persuade them to take out their credit card. One of the most common deals for new customers is 0% interest on purchases for a fixed period of time. This is an excellent Christmas credit card because it allows consumers to buy all their festive gifts without having to pay high interest payments too.

0% Balance transfer

This type of credit card is designed to help consumers reduce the cost of their outstanding debt, as they can transfer high interest balances to a cheaper card. This card should not really be used for additional borrowing, but reducing the cost of existing debts. If you are looking for a card to do Christmas shopping a 0% purchases card may be more appropriate.

If you are looking to transfer a balance from another card because your last 0% balance transfer (BT) offer has run out and you need a 0% purchase deal for this year’s Christmas shopping, you can get cards that offer both a 0% BT and 0% purchase interest free period.

Credit-builder

If you don’t have a good or excellent credit rating, you might struggle to get accepted for a standard card. Credit building credit cards are designed to help consumers improve their credit score and their ability to access more affordable credit in the future. This credit card should not really be used to borrow money – you should really just use the card to pay for things and then pay the bill off in full each month to demonstrate to future lenders that you can manage credit sensibly. If you don’t pay your bill off in full each month, you will have to pay high interest charges because the interest rates on cards for building credit are higher than standard cards.

Rewards

These cards reward their customers for spending on their credit cards. Benefits can range from air miles to High Street gift vouchers. The interest rates are usually higher on reward credit cards due to the value of the benefits cardholders can receive. Rewards credit cards are best suited to people who use their credit cards regularly but always pay off the full balance every month. If the balance isn’t paid off in full each month, the interest charged will outweigh the rewards earned.

Christmas credit card tips

  • If you have opted for a 0% purchases credit card, make sure you have the ability to repay the outstanding balance before the introductory period expires or you will face interest charges on your remaining balance once the 0% period ends
  • Using credit cards for purchases of between £100 and £30,000 will protect you under Section 75 of the Consumer Credit Act, meaning that if a company fails to deliver your items (if it scam you or if it goes bust) you can claim your money back from your credit card company
  • Compare credit cards to make sure you are getting the best deal.

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Prepaid card security

One of the best things about carrying travel prepaid cards instead of cash is the security that they give you.

If you lose cash, you can forget about ever getting it back, but if you lose a prepaid card, you can have it cancelled and replaced for a small fee.

Another security advantage of prepaid credit cards is that they are not tied to a bank account or line of credit. So, in the worst case scenario, if someone were to make off with your card and PIN and spend all the money on it before you noticed it was missing they wouldn’t have access to your bank account or a credit line. And, if they didn’t know your PIN, they would be out of luck anyway.

As far as purchase protection under Section 75 of the Consumer Credit Act of 1974, you normally do not get this type of purchase security with prepaid cards. However, the CashPlus prepaid card does include this purchase protection.

When you compare prepaid cards, be sure that you look specifically at travel prepaid cards if you want one for spending abroad. Everyday prepaid cards can result in big jumps in ATM and transaction fees once you go out of the UK.

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Many of you will use your credit card almost every day.  And, if you have a business credit card account, it is likely that either you or your employees will be charging expenses to the account on a regular basis.

Using a credit card to pay for goods or services is common.  This is particularly true of companies who use business credit cards to closely monitor expenses and to keep a track of their company outgoings.

One of the advantages of using a credit card (rather than a debit card, cash or a cheque) is that, under credit card legislation contained in section 75 of the Consumer Credit Act 1974, if you have a claim against a supplier for breach of contract or misrepresentation, you will generally also have an equal claim against the issuer of the credit card.

But, does this rule apply to business credit cards?

Section 75 for consumer cards only

The answer is NO.  According to the Financial Ombudsman Service, Section 75 does not apply to business credit cards.  It is the ‘consumer’ part of the ‘Consumer Credit Act’ (which section 75 is part of) that stops the rule applying to business credit cards.

So, if you own and regularly use a business credit card, you will not have an equal claim against the issuer of a card if you do have to make a claim against a supplier for breach of contract.

When the Section 75 credit card legislation does apply

If your credit card is a personal, not a business credit card, you may still be able to claim under the Section 75 rules.  For section 75 to apply:

•    It must be a consumer not a business credit card
•    The cash price of the goods or services must be over £100 and under £30,000
•    The purchase must be made using a credit card (not a charge card or debit card)

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If you carry cash and lose it, then you’re basically out of luck as far as getting it back. But if you carry a prepaid card instead, then you have protections that you do not have with cash. To use your prepaid card, you must enter your PIN, whether shopping in person or online. If someone has your card, but not your PIN, they cannot use the card.

Additionally, if you lose your prepaid card, you can call the issuer and have them block the card, so that even if someone who knew your PIN got your card, they couldn’t use it. You can have your issuer replace the card, but there may be a fee for this service. However, you’re still far better off than you would be if you were carrying cash and then lost it.

Other protections with prepaid cards have to do with the fact that they are not linked with your bank account, so fraud and identity theft are not threats.

However, though you can have the issuer initiate a chargeback in the event that goods or services are not delivered, be aware that unless a prepaid card issuer specifically offers protection similar to Section 75 purchase protection, you do not have the same purchase protection you would with a credit card.

However, even with the lack of Section 75 protection, your spending power is far safer with prepaid cards than with cash because of PIN and chargeback protection.

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Prepaid cards are very similar to credit and debit cards in that they can be used wherever credit and debit cards are accepted, and can be used to make online purchases. However, with a prepaid card, you can only spend the amount of money that has been “loaded” on to the card. For these reasons, they are great for people looking to manage their money while still being able to shop online. They’re also a great way to give teens their allowance, while also allowing them to make the most of shopping online, but not letting them spend any more than they have.

There are two basic types of prepaid cards: everyday prepaid cards and travel prepaid cards. Everyday prepaid cards are for your ordinary spending in the UK, while travel cards are a great choice for spending abroad, as long as you find the ones with the lowest fees. Most travel prepaid cards are limited to spending in Euros or US dollars, but there are a few that offer more currencies if you are going further afield.

Three good choices include the FairFX, CaxtonFX, and Travelex Cash Passport prepaid cards. The Travelex Cash Passport is not as good a deal as the others, but they all offer spending in Euros, US, Australian, New Zealand, and Canadian Dollars, and South African Rand.

We have a great tool for comparing prepaid cards where you’ll be able to compare set-up fees, monthly fees, load fees, and ATM fees, as well as extra perks, such as ways to build your credit rating using prepaid cards.

Problems with prepaid cards are relatively rare, but you should be aware of the possibilities. If the bank issuing the prepaid card fails, you have no protection, so it’s highly inadvisable to use prepaid cards to store all your cash. Additionally, while you get mandatory Section 75 protection when you buy goods worth more than £100 with a credit card, you do not get this purchase protection with a prepaid card. Finally, most prepaid cards have a maximum they can hold at once, usually £3,000 – £5,000, and a cap on yearly spending.

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