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Consumer Credit Act

If you have used a credit card to pay for goods or services of between £100 and £30,000 in value, Section 75 of the Consumer Credit Act provides you with some welcome extra protection.

Section 75 entitles credit card users to claim a full refund from their credit card provider should the retailer or manufacturer fail to keep up their end of the bargain.

Essentially, it gives you a buffer zone should you pay for faulty goods or a service or item that failed to materialise and/or are not of satisfactory quality.

What is covered by Section 75?

Section 75 covers all credit card or store card purchases made between £100 and £30,000.

It only applies to credit cards such as Visa or MasterCard. Debit cards and charge cards such as American Express are not covered.

The purchase has to have been made on a single product or booking. For example, if you bought a suit for £120 you'd be covered, but if you bought the jacket and trousers separately for £70 and £50 respectively, you would not be covered.

Some other forms of credit are covered. Finance for a sofa for example (except if the supplier is also the creditor).

Section 75 applies even if the product or service was only partly paid for with a credit card. For example, if you purchased a games console for £200, £20 of which was put onto your credit card and the rest paid by debit card, although the law is not entirely clear here you should be able to claim a refund under Section 75.

Some more examples where Section 75 can apply:

  • If you buy goods from a retailer but the retailer goes into administration before the goods are delivered
  • If building work on your home was not up to standard
  • If you order goods from a store overseas via the internet but the goods never arrive

Basically, any goods or services which turn out to be faulty, fail to materialise, are of poor quality, or were mis-sold to you in any other way, are covered.

How to get a refund with Section 75

In most cases, when you have purchased an unsatisfactory product, it is best to contact the retailer first to ask for a refund as most stores and companies have refund policies in place.

However, in instances where it's difficult to contact the retailer (e.g. they've gone bust, they're based abroad), or if your first offer of a refund was inadequate, then you can contact the credit card provider directly and demand a full refund under Section 75.

To make a claim against your credit card provider just follow these simple steps:

  • Contact your credit card provider in writing and explain that you'd like to request a refund under Section 75 of the Consumer Credit Act 1974. 
  • Specify what the problem is (e.g. whether the product was faulty or has not been delivered etc).
  • Include details such as the date of purchase, the retailer or service provider you made the purchase with, the products or services you paid for with the credit card and their total value - it can be useful to include copies of any receipts or other paperwork you have relating to the transaction.
  • If you tried to resolve the issue with the retailer without success, make sure to include copies of any correspondence you have with them.
  • Specify that you expect a reply within 14 days.

Some firms provide Section 75 forms which you can fill out and then send back to them with any supporting documents. To obtain one of these just call your credit card provider and request one.

Remember, obtaining a refund under Section 75 is a part of your consumer rights and is a legal entitlement.

Credit agreements

The Consumer Credit Act provides much needed protection for people who enter into credit agreements.

The kinds of credit agreements that the act covers include:

  • Credit cards, charge cards, etc
  • Goods which you take away with you but the price is paid in instalments
  • Goods that are paid for in instalments but are not given to you until the final payment
  • Hire Purchase agreements, whereby you pay by instalments to use the goods, but have an option to buy the goods if you want to after all the instalments have been paid

The rights that the Consumer Credit Act entitle you to when entering into a credit agreement include:

  • A cancellation period, if the agreement was signed in your own home. The seller is required to provide you with cancellation details in writing, i.e. how long you have to cancel and how to go about it. If you cancel within the agreed time, you are entitled to a full return of any deposit paid or goods traded.
  • To be provided with a written notice should the provider of the credit (the creditor) wish to ask for early payment, get the goods back from you, or end the agreement.
  • This notice must include how much should be paid to bring payments up to date, the schedule for the payments, the consequences of non-payment and how the agreement can be brought to an end.
  • Under an HP agreement, the creditor must get a court order to take back any goods if a third of the total price has already been paid. You also have the right to ask the court to suspend the Return Order and let you pay the outstanding balance in instalments. If the creditor attempts to take the goods back without your permission and without a court order, you can sue them and reclaim everything you have paid them so far under the agreement.
  • If the credit agreement is so unfair that it can be deemed as “extortionate”, the court can replace it with a new agreement or amend the existing one.

To determine whether the agreement is “extortionate” the court will take into consideration your age, experience, “business knowledge”, your health and the financial burden placed upon you by the agreement. The court will also look at the creditor’s position to see if they acted unreasonably.

  • If a third party sold the credit agreement to you, you are entitled to sue either the seller or the provider of the credit (e.g. if a furniture shop arranges your finance with a credit provider).

This lets you claim compensation or a refund from the credit provider if the seller goes out of business.

  • Most forms of credit agreements to include the following information:
  • The total charge for credit
  • The Annual Percentage Rate (APR)
  • The cash price for the goods

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