Legal rights when buying goods with a Credit Card

Many people using credit cards for their shopping are not fully aware of their rights. In this article, we will discuss how to claim against your credit card provider if the goods are faulty.

This may be particularly useful if the person who sold you the goods is unable to give you a refund. We will also provide you with a sample S75 of the Consumer Credit Act 1974 letter to use when making a claim.

Making a Claim

There are two main ways of making a claim to the credit card provider, namely:

• Section 75 of the Consumer Credit Act 1974 if the goods are for more than £100 but less than £30,000.00;
• Chargeback if the goods are worth less than £100.

S75 of the Consumer Credit Act 1974

Section 75 of the Act applies to both goods purchased on a credit card and normal type of loan arranged by the seller. The section specifically does not apply to goods purchased on a hire purchase or conditional agreement.

There is no requirement to firstly pursue a claim against the seller, you can make a claim against the credit provider straight away. Alternatively, you can also elect to pursue a joint claim against the seller and the credit provider.

Importantly, for goods purchased on credit after 1 February 2011, you may be able to make a claim even if the value is more than £30,000.00. However, if the goods are worth more than £30,000.00 and you bought them before 1 February 2011 you will not be able to make S75 claim.

Unlike in the case of goods worth less than £30,000.00; for goods worth more than that you will need to meet additional criteria. One of them is to attempt to claim the sum from the seller first.

Once you have tried to claim the money off the seller and:

• The seller has refused or is unable to give you compensation;
• It has not been possible to contact the seller successfully;
• The seller has liquidated its business;
• The credit is for less than £60,260;
• The goods were not purchased on a credit card;
• The loan agreement clearly specifies the goods that you have purchased (i.e. a new car);
• You have not received and accepted alternative compensation or replacement of the faulty goods from the seller;
• Your loan was a personal and not business loan;
• The loan was arranged for you by the seller. If you have found the lender yourself, you will not be able to make a claim.
• The loan is not a hire purchase or conditional sale arrangement.

Sample S75 Claim Letter

YOUR NAME AND ADDRESS

CREDIT PROVIDER’S DETAILS INCLUDING ADDRESS

 (DATE)

 Dear Sirs,

 Reference:

I am lodging a claim in relation to (ITEM DESCRIPTION) that I  purchased using my credit card (INSERT DETAILS) on (DATE) from (RETAILER’S BUSINESS NAME AND ADDRESS).

When the item was delivered, I discovered it was faulty because (EXPLAIN THE FAULT).

I have tried unsuccessfully to resolve this dispute with the retailer and now require you to pay me for the cost of repairing it or for providing a full refund (SELECT AS APPROPRIATE).

I base my claim on section 75 of the Consumer Credit Act 1974 which makes you jointly and severally liable for any breaches committed by the retailer.

I would greatly appreciate if you responded within 14 days.

Yours faithfully,

For more letter templates you can also visit the Which? website.

Credit/Debit Card Chargeback

Chargebacks are operated by banks and card providers (i.e. VISA). Chargeback allows you to reverse a card transaction if there is a problem with goods you have purchased (i.e. the goods do not match their description or are faulty).  You can use chargebacks both with credit and debit cards. The right to make a successful chargeback is not automatic and is subject to the provider’s assessment. To make a chargeback you will need to contact your bank within a certain time period that should be specified in the agreement between you and the bank. The time limit also depends on the type of card that you have. VISA’s time limit is 120 days. The bank, in turn, will contact the seller’s merchant bank provider and attempt to recover the money.

Chargebacks are particularly useful in the case of goods worth less than £100.