Section 75 Claim - Consumer Credit Act 1974 (as amended)

[dossier]

Hi all

I am new to legalbeagles, but wanted to start a thread to get help with a Section 75 claim I am beginning to pursue with American Express UK concerning tuition services paid for an academic programme.

Is this the best place to post questions regarding the details of Section 75 of the CCA and how to approach the issue, including tactics, approach and documentation required?

Many thanks

[EXC]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Here's fine.

What's the basis for the claim?

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Here's fine.

What's the basis for the claim?

Thanks. It's a 2 year academic programme which I paid for through my American Express card. The quality of tuition was below standard and the service was misrepresented. The total cost of academic programme is over £30k, but each "year" of the 2 year programme is under £30k per year.

The first issue is whether this causes a problem with a Section 75 claim, as the total "cost" of the academic programme is over £30k, although it could be argued that there is a 1st year part and a 2nd year part, each of which falls below £30k.

My Section 75 claim relates to tuition fees paid for the 1st year part, which is under £30k (and above £100).

Does anyone have any guidance on the £100 - £30k criteria for a Section 75 claim? I suspect this could be an easy argument for Amex to reject my Section 75 claim, but want to make sure I have this as "rock solid" as I can before I submit a claim to Amex.

In the case of this claim, there is:

- a clear relationship between the customer and the merchant (payments were made directly by Amex)
- a clearly executed T&Cs document between the customer and merchant
- customer and merchant both clearly identifiable
- customer and merchant are in England; T&Cs under English law; UK issued Amex credit card payment
- no payment intermediary involved (i.e. no paypal or 3rd party which breaks the customer - merchant payment route)
- customer is the primary cardholder of the Amex card (no second cardholder issues)
- payments made to the merchant and service provided by the merchant well within the last 6 years (so not yet running any risk of statue of limitations)

The more challenging parts are:

- total "value" of all tuition services over £30k, although each year under £30k (I have concerns this may be an argument for Amex to reject the s 75)
- each year is contractually a "discrete" part - albeit one T&C for the whole service
- providing sufficient documentary evidence for the misrepresentation by the merchant and the breach of contract by the merchant (what key evidence can one produce to support this?; as it is a service rather than a good, it is harder to produce the supporting evidence)

[EXC]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

There are some FOS sec 75 case studies, one or two of which cover the £30k limit issue http://www.financial-ombudsman.org.u...mer-credit.htm

Can you post up a copy of the contract, particulary anything that defines the duration/cost of it?

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

There are some FOS sec 75 case studies, one or two of which cover the £30k limit issue http://www.financial-ombudsman.org.u...mer-credit.htm

Can you post up a copy of the contract, particulary anything that defines the duration/cost of it?

Thank you. I have seen the FOS case studies, but the only example there is not supportive, in that it is a purchase of a property well over £30k, which the FOS rejected accordingly! In my case, there is potential scope to argue it either way: either the academic programme is a "single product", costing over £30k, or two components, each costing under £30k (perhaps akin to a return train journey with two single parts).

"Miss L entered into an agreement to buy a holiday apartment on a new development in Cyprus. The apartment cost 125,000 euros and she was asked to pay a deposit of 5,000 euros. She did this using two credit cards; one to pay 3,000 euros and the other to pay 2,000 euros.
She said the developer had assured her that a Cypriot mortgage company would provide a loan 'on guaranteed terms' for the remainder of the purchase price. But shortly after she had signed the agreement and paid the deposit, the mortgage company told her it was only willing to lend up to 60% of the purchase price. Miss L could not afford to proceed, so she lost her deposit.
After discussing the situation with a colleague, she became convinced that the property developer had colluded with the mortgage company in making false promises about the mortgage, in order to get her to pay a deposit.
On her colleague's advice, Miss L contacted the providers of the two credit cards she had used. She outlined what had happened and said she was making a claim under section 75, on the basis of misrepresentation by the property developer.
Neither of the card providers was willing to refund the payment Miss L had made to the developer. And both of them insisted that her transaction was not covered by section 75. They said this was because the total cost of the apartment exceeded £30,000 - the maximum limit under section 75 for the cash price of the goods or services bought.
Miss L thought this was unfair. She argued that her claim related to the deposit she had paid, not to the total purchase price of the apartment. As neither of the card providers would reconsider her claim, she then brought a complaint to us.
complaint not upheld
We could understand why Miss L had thought the dispute was about the 5,000 euros that she had paid for the deposit. However, what she had bought was not that deposit. She had bought an apartment, and had paid a deposit of 5,000 euros towards the 125,000 euro price of her apartment.
For section 75 to apply, it is a requirement that - among other things - the cash price of the goods or services bought must be no less than £100, and no more than £30,000. As 125,000 euros was considerably more than £30,000, it was clear that section 75 did not apply. So we told Miss L that the card providers were not under any liability to refund the money she had paid as a deposit on the apartment."

- - - Updated - - -

A copy of the T&Cs (redacted):

[ACADEMIC INSTITUTION ADDRESS]
Tel: [ACADEMIC INSTITUTION TELEPHONE]
Fax: [ACADEMIC INSTITUTION FAX]

[ACADEMIC INSTITUTION URL]

A Graduate School
of the University of [REDACTED]

[ACADEMIC INSTITUTION] - General Terms and Conditions for Degree Programmes

I confirm that l have read and agree these Terms and Conditions:

Student’s signature:

Student’s name in block capitals:

Date signed:

Class:

Definitions

1. In these Terms and Conditions:

“Academic Year" means the period commencing on the first day of scheduled teaching for the Student and ending on the anniversary of that date, and where relevant, each subsequent year thereafter, until completion of the Programme;
“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in London;
“Default Rate” means an annual rate of three per cent (3%) above the base rate from time to time of HSBC Bank plc;
“Faculty” means the academic and teaching staff of the School;
“the Programme” means the course at the School which the School has offered the Student a place upon; and
“the School" [ACADEMIC INSTITUTION] (a company incorporated by Royal Charter with registered number [REDACTED]).
Conditional Offers

1. If conditions are attached to the School's offer of a place on the Programme (e.g. improved GMAT score, improved English language, compulsory attendance on stipulated pre-programme courses) the Student’s right to participate on the Programme is conditional upon the condition(s) being satisfied by the deadlines specified by the School in the offer letter.

Amendments to the Programme

1. The School will make all reasonable efforts to deliver the Programme as described in the brochure and on the School’s website. However, the School must manage its resources efficiently and shall be entitled:

(a) to alter the timetable, location, number of classes and method of delivery of the Programme; and
(b) to make reasonable variations to the content and syllabus of the Programme.

1. The School will make available to the Student such learning support, IT and other facilities it considers appropriate, but may vary what it provides from time to time provided such variations are reasonable.

The Student’s Obligations

1. The Student is personally responsible to the School for the payment of all fees due in respect of the Programme, irrespective of whether any third party has agreed to sponsor him/her. The Student shall remain liable to the School even if a sponsor defaults.

1. Fees for each Academic Year accrue separately and the fees payable in respect of an Academic Year fall due on the first day of the relevant Academic Year and will be included in an invoice sent to the Student. The fees must be paid in full either by cheque, by direct bank transfer or by credit card by the first day of the Academic Year to which the invoice relates.
2. The School may agree separately that the fees that are due in relation to an Academic Year can be paid in instalments. If the School so agrees in relation to an Academic Year’s fees (or any part of them), then the School and the Student liable for those fees will agree separately, in writing, the amount of the fees that is to be deferred and the anticipated schedule of instalments by which the deferred amount is to be paid. As a condition of the School's agreement to such a deferred payment arrangement, the agreed amount for each Academic Year shall be paid in not more than four (4) instalments within a period that does not exceed twelve (12) months beginning with the date of the relevant invoice. The School shall issue a separate invoice and schedule of instalments relating to the fees due in respect of each Academic Year, which shall be evidence of the separate agreement for the payment of that Academic Year’s fees.

8. The Student must:

1. at all times behave with honesty and integrity and show courtesy, consideration and respect for others;
2. attend all compulsory classes, lectures, tutorials, examinations and other activities which form part of the Programme (subject to absence for medical or other agreed reasons) and participate fully in group work where required;
3. submit course work and other assignments required for the Programme by the deadlines specified by the School (subject to exceptional circumstances such as illness);
4. achieve the academic standards required for the Programme by the School;
5. telephone or email their Programme Office if they become ill or suffer an injury that is likely to cause them to be absent from the School for more than five days and (if requested to do so by their Programme Office) provide a doctor's certificate in respect of any such absence from the Programme;
6. be adequately prepared for any activity that the Student is required to undertake as part of the Programme outside the School;
7. conduct all assessed work individually and without collaboration (except where a member of Faculty has given explicit instructions that group co-operation is expected);
8. conduct all assessed group work in a fully collaborative way with each group member making a contribution;
9. ensure that he/she understands all instructions given to him/her for assessed work;
10. fully acknowledge the use of material referred to or copied from other sources and comply with the provisions of the Copyright, Designs and Patents Act 1988;
11. refrain from discussing assessed work with students or alumni who have previously undertaken similar work (unless directed by a member of Faculty to do so);
12. notify the School if he/she believes that another student has broken the School’s examination and assessment regulations;
13. abide by any special conditions relating to the Programme set out in the brochure or othen/vise notified to the Student by the School;
14. provide the Student's Programme Office with the contact details of a person whom the School may contact in the event of an emergency;
15. notify the Student’s Programme Office of any change to the information which the Student submitted on application or enrolment (e.g. UK address);
16. ensure that all information he/she provides to the School’s Careers Services department is true, accurate and not misleading;
17. respect the confidentiality of all confidential information that the Student acquires during the course of his/her participation in the Programme; and
18. comply with all other relevant rules and regulations of the School, as amended from time to time (including: (i) the School’s student disciplinary rules; (ii) the examination and assessment regulations relating to the Programme; (iii) the School’s rules relating to the use of Portal and its other IT facilities and equipment; and (iv) [ACADEMIC INSTITUTION] Career Services Code of Conduct for Students and any code of conduct that is issued by [ACADEMIC INSTITUTION] Student Association.

Deferral

1. The Student does not have a contractual right to defer from the Programme to a later programme. Any deferrals are entirely at the School’s discretion. In any event the School does not ordinarily allow a student to defer to a programme that commences more than a year after the programme on which he/she was originally placed.

Consequences of Late Payment

10. If the Student fails to pay any sum payable to the School in connection with the Programme on the due date for payment, the School may charge interest at the Default Rate on the amount from time to time outstanding until payment is made in full. The interest payable in respect of any calendar month (or any part thereof) shall be calculated by reference to the Default Rate on the last Business Day of that calendar month. Any interest payable by the Student pursuant to this paragraph shall be payable within five Business Days after the School’s written demand.

11. If the Student fails to pay any sum owing to the School in connection with the Programme within four weeks after the due date for payment, the School may:
(a) suspend the Student from participation in field trips, vacation placements, exchange programmes and other similar activities;
(b) suspend the Student from participation in any further lectures, seminars or other teaching sessions;
(c) exclude the Student from access to the School’s premises and/or use of any of its facilities; and/or
(d) withhold confirmation of the Student's degree or final transcript.
(Note: See also paragraph 13(a) below).

12. The School provides benefits and services (including the giving of references to potential employers) to its alumni community on a discretionary basis. No alumnus has a contractual right to these benefits and services. The Student should note, however, that it is the School's policy to withhold alumni benefits from alumni who have failed to pay the School all the fees due in respect of their programme or defaulted on any loan arrangement relating to programme fees.

Termination by the School

13. The School may terminate the Student’s participation in the Programme by giving the Student immediate notice in writing if:
(a) any sum owing by the Student to the School in connection with the Programme is not paid within four weeks after the due date for payment; or
(b) the Student commits a serious breach of these Terms and Conditions or any of the other rules and regulations of the School; or
(c) the Student behaves in a manner that, in the opinion of the Dean, is prejudicial to the interests of the School
Termination by the Student
14. The Student may terminate his/her participation in the Programme by giving the School written notice of termination not less than four weeks before the date on which the Programme commences. In these circumstances the Student shall not be liable to pay the School any sum other than those sums which have already fallen due for payment (e.g. reservation and commitment fees).
15. At any time after the commencement of the four week period referred to in the preceding paragraph (paragraph 14) the Student may terminate his/her participation in the Programme by giving the School not less than three (3) months’ prior written notice of termination, such notice to expire on or before the anniversary of the first Academic Year. The Student may terminate his/her participation in the Programme at any time during the second Academic Year on giving the School written notice. For the avoidance of doubt, the Student shall remain liable to pay the School all of the fees payable in respect of the Programme for the Academic Year during which any such notice permissible under this paragraph 15 is given.
16. For the purposes of paragraphs 14 and 15 above, the Programme shall be deemed to commence on the first day of scheduled teaching for the Student.
Effect of Termination
17. When either party terminates the Student’s participation on the Programme:
(a) the School shall be entitled to require the Student to stop studying on the Programme and to leave the School's premises immediately; and
(b) the Student shall immediately return to the School the identification/swipe card issued to the Student on enrolment and all other property in the Student's possession, custody or control that belongs to the School.
Disclaimer
18. The School cannot accept responsibility and expressly excludes liability for any loss or damage to the Student’s property and belongings that occurs whilst the Student is on the Programme. The Student should take particular care not to leave mobile phones or laptops unattended at any time.
Governing Law and Jurisdiction
19. The contract made between the School and the Student in relation to the Programme, of which these terms and conditions form part, ("the Agreement”) will be governed by English law and the parties submit for all purposes connected with the Agreement to the exclusive jurisdiction of the English Courts.
Third Parties
20. The School and the Student agree that the Contracts (Rights of Third Parties) Act 1999 shall not apply to the Agreement.
Notices
21. Any demand or notice to be served upon the Student may be served upon the Student personally or sent by post to the place last known to the School as the Student’s home address in England. Any demand or notice to be served upon the School shall be delivered by hand or sent by post to the Programme Director at the School. Any demand or notice delivered personally shall be deemed to have been received immediately upon delivery. Any demand or notice sent by post shall be deemed to have been received at the opening of business on the first Business Day following the day on which it was posted, unless sent by international mail in which it event it shall be deemed to have been received at the opening of business on the third Business Day following the day on which it was posted.
Information provided by Student
22. The Student warrants to the School that all information that he/she has provided to the School during the course of his/her application to join the Programme is accurate and not misleading.

Data Protection

23. The Student acknowledges that the School is registered as a data controller under the Data Protection Act 1998 and that data about students and alumni (“Personal Data") may be processed by the School for the following purposes: student and alumni administration, education services, accounting, record-keeping, directory publication, fundraising, databank administration, the promotion of students and alumni to prospective employers, the provision of references to actual or prospective employers and other career services, health and safety and any other reasonable purpose relating to the School’s relationship with its students and alumni. The Student consents to the processing by the School of personal data relating to the Student for all of the aforementioned purposes.

[EXC]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Thanks.

I can see your predicament, it's not very clear cut is it?

Given that this is a lot of money I think you should consider getting some formal advice from a solicitor who specialises in CCA, not just on the £30k issue but whether you have a valid claim in respect of the misrepresentation and standard of the course in any event.

[charitynjw]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

What payment option did you choose?

Full amount in advance?

Installment options? (& if so, frequency, number & amount of payments)

Etc.

[Amethyst]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Have you been through the full complaints process and requested refund from the academic institution ?

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

What payment option did you choose?

Full amount in advance?

Installment options? (& if so, frequency, number & amount of payments) Etc.

Thanks. Payment was made by instalment. The provider offers an instalment payment structure, that falls outside the scope of the Consumer Credit Act (i.e. such that the provider does not get caught within the CCA) in terms of providing any credit themselves.

So each "academic year" consisted of 3 payments during the year for the amount due: i.e. < £30k each "academic year".

Payment was always made by Amex UK credit card for all of these payments.

- - - Updated - - -

Have you been through the full complaints process and requested refund from the academic institution ?

I am currently in process with a full complaints process; but also have received the relevant claim forms from Amex UK regarding a Section 75.

I also wanted to know what the appropriate process is for a Section 75 claim of this nature.

- - - Updated - - -

Thanks.

I can see your predicament, it's not very clear cut is it?

Given that this is a lot of money I think you should consider getting some formal advice from a solicitor who specialises in CCA, not just on the £30k issue but whether you have a valid claim in respect of the misrepresentation and standard of the course in any event.

Thank you. Any recommendations on such a solicitor is most welcome, as I am not sure I would know where best to look.

- - - Updated - - -

What payment option did you choose?

Full amount in advance?

Installment options? (& if so, frequency, number & amount of payments)

Etc.

I believe this note by Farrer sets out fees by instalment quite well: "An important exemption under the CCA in this context is one which allows a fixed sum (i.e. the fees) to be paid within a period of 12 months and in no more than four instalments. This potentially allows an HEI to agree with a student that they may pay their course fees in a maximum of four instalments over a period of 12 months, with the final payment being made no later than the day before the anniversary of the date that the agreement for credit was entered into with the student. "

http://www.farrer.co.uk/Global/Brief...institutes.pdf

[EXC]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Thank you. Any recommendations on such a solicitor is most welcome, as I am not sure I would know where best to look.

I'll ask [MENTION=551]pt2537[/MENTION] if he's got any ideas.

[charitynjw]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Thank you. Any recommendations on such a solicitor is most welcome, as I am not sure I would know where best to look.

http://solicitors.lawsociety.org.uk/

[pt2537]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

I'll ask @pt2537 if he's got any ideas.

Seems this case has difficulties, while i can see the argument of each year being a discrete part of the contract, i think careful consideration is needed of the provision of s75.

Banks in cases such as lankbanking cases which i have dealt with have tried to argue that because the client purchased 4 plots at £25k per plot then the price is over £100k and thus outside of the remit of s75. That argument is easily countered, this one however, well im not sure to be fair.

To me, it seems that the first year and second year are very much joint at the hip, you couldnt undertake a second year of the course without doing the first year, nor im sure would you be able to get the qualification at the end of the second year without studying the first year too. At least thats my thought on that aspect.

You would need to show that the first year and second year both stand on their own feet to pull this into s75

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

For everyone's convenience, I have posted Section 75 of the Consumer Credit Act 1974 (as amended) below:

75 Liability of creditor for breaches by supplier.E+W+S+N.I.(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.
(2)Subject to any agreement between them, the creditor shall be entitled to be indemnified by the supplier for loss suffered by the creditor in satisfying his liability under subsection (1), including costs reasonably incurred by him in defending proceedings instituted by the debtor.
(3)Subsection (1) does not apply to a claim—
(a)under a non-commercial agreement, F1. . .
(b)so far as the claim relates to any single item to which the supplier has attached a cash price not exceeding [F2£100] or more than [F3£30,000][F4, or]
[F5(c)under a debtor-creditor-supplier agreement for running-account credit—
(i)which provides for the making of payments by the debtor in relation to specified periods which, in the case of an agreement which is not secured on land, do not exceed three months, and
(ii)which requires that the number of payments to be made by the debtor in repayments of the whole amount of the credit provided in each such period shall not exceed one.]
(4)This section applies notwithstanding that the debtor, in entering into the transaction, exceeded the credit limit or otherwise contravened any term of the agreement.
(5)In an action brought against the creditor under subsection (1) he shall be entitled, in accordance with rules of court, to have the supplier made a party to the proceedings.

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Seems this case has difficulties, while i can see the argument of each year being a discrete part of the contract, i think careful consideration is needed of the provision of s75.

Banks in cases such as lankbanking cases which i have dealt with have tried to argue that because the client purchased 4 plots at £25k per plot then the price is over £100k and thus outside of the remit of s75. That argument is easily countered, this one however, well im not sure to be fair.

To me, it seems that the first year and second year are very much joint at the hip, you couldnt undertake a second year of the course without doing the first year, nor im sure would you be able to get the qualification at the end of the second year without studying the first year too. At least thats my thought on that aspect.

You would need to show that the first year and second year both stand on their own feet to pull this into s75

Thanks. I am aware that the key aspect of the CCA Section 75 is "so far as the claim relates to any single item to which the supplier has attached a cash price not exceeding [F2£100] or more than [F3£30,000][F4, or]"

The academic institution has invoiced in two parts:

The first year (with first year fees under £30k) during the first year and a separate invoice at a subsequent date for the second year (with second year fees under £30k). Combined, these are clearly over £30k in total.

It is obviously true that one cannot do the second year without having done the first year. This is perhaps analogous to a return journey ticket vs two singles: going from A to B and then B to A, with no alternative way of getting from A to B in order to use the B to A part.

My claim under Section 75 relates only to the 1st year, for fees paid totalling under £30k. Due to the misrepresentation and breaches by the academic institution, I ceased payment and therefore did not pay the 2nd year fees.

Therefore, the total monetary amount paid to the academic institution is under £30k, and the section 75 claim relates only to this 1st year (I am not trying to claim a refund on the 2nd year which was unpaid for anyway).

Does this help the basis of the claim?

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

It may be worth noting this. Section 75 of the CCA states that "so far as the claim relates to any single item to which the supplier has attached a cash price not exceeding [F2£100] or more than [F3£30,000][F4, or]"

The supplier, in this case the academic institution, has attached a total cash price exceeding £30k to the total qualification.

However, the invoicing is separately for the 1st year and the 2nd year. Each is under £30k. Also, the T&Cs indicate an ability to terminate the service, say at the end of the 1st year (with notice), that would limit the payment to the 1st year and the service rendered. My assertion would be that each single item is one academic year of service, for which each of these has a cash price under £30k.