A guide to credit cards and the Consumer Credit Act 1974

imagesAX32L6R1If you have a problem with an item you have bought or service you have received you can contact your credit card company. You may want to do this for example when the company has gone bust, is refusing to give you a refund or does not respond to communications from you. You have a right to be refunded if you make a claim within 6 years (5 in Scotland) using Section 75A of the Consumer Credit Act 1974.

Purchases over £100 and less than £30,000 are covered. You are covered if you pay as little as 1p but the item costs more than £100.

In 2007, a ruling by the House of Lords defined that Section 75 has no territorial limitations, therefore, cardholders who use their credit cards to make purchases abroad are protected in the same way as in the UK. So, purchases made on a credit card may also be covered under Section 75 when; goods or services are purchased from a foreign supplier whilst the cardholder is abroad, purchased from a foreign supplier for delivery to the UK, or purchased from a foreign supplier or agent who is temporarily in the UK.

Completing a credit card transaction through a third party payment service means that the credit card provider and the seller are no longer in a direct relationship so are not equally liable. This applies therefore to services such as PayPal, Amazon Marketplace, Worldpay and Google Checkout.

In the UK, where you are entitled to specific statutory protections the credit card company is a second party to the purchase and is therefore equally liable in law if the other party defaults or goes into liquidation. However under Section 75 Consumer Credit Act 1979, the purchaser loses this legal protection if the card payment is processed via PayPal.

For an example of using the Consumer Credit Act 1979 see this post.

Chargeback
Purchases bought on debit cards and below £100 are not covered by the Section 75 of the Consumer Credit Act 1974. Chargeback, although not part of any act of law, is a voluntary scheme based on scheme rules set by card issuers such as Mastercard and Visa. Because it isn’t set in law you should use the Consumer Credit Act 1974 where possible, otherwise Chargeback can be applied for similar situations.

You will need to make the request within 120 days of the transaction date. Bear in mind that this scheme is much less well known than the Section 75 rule and so many staff might not know of it if you ring the bank. My advice therefore would always be to write.

If the bank/credit card company rejects your claim and/or you are unhappy with the process you can take the matter to the Financial Ombudsman but not to court.

For help in complaining when you can’t use this cover see Tips for complaining.

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