s75 consumer credit act

[unclebobby]

Hi, is there anyone here who knows their consumer credit act law?

My understanding is that you are covered under s75 if you pay for anything over £100 upto £30k on your credit card. You are also covered if you pay for a small part (£1) of it on your credit card.

My question is when does the payment on the credit card have to be made in order to get protection? Does it have to be the first payment to say, the service provider, or could it be the last payment you make to them after a job has been completed?

If it doesn't matter when the payment is made, does that in turn effect when the three-party relationship begins?

[warwick65]

I was always under the impression you had to pay at least £100 on your credit card, I may be wrong though
Amethyst

[Amethyst]

The legislation doesn't give a minimum amount you have to have paid on your card to be covered, just th(single item) purchase must be over £100 in total.

Here's a Financial Ombudsman decision on a deposit of £99 paid on a sofa costing over £100 which the balance was paid later ( or due to be )...

It's safer to pay over £100 on the credit card though ( you could pay it by credit card then pay that £100 off the credit card straight away ) and as per the example it is best to make the first payment by credit card, I don't know how it would work out if you'd paid for everything in case/cheque/BACS then paid a final penny on credit card to try get the protection of s75.

102/12
consumer claims under section 75 for a deposit that's below the £100 lower limit - but the total purchase price is above it


Miss N decided to buy a leather sofa for £1,000 from her local furniture store. She paid £99 on her credit card as a deposit, with the balance due on delivery a few weeks later. Unfortunately, the store went out of business before it delivered the sofa.

When Miss N mentioned the situation to a friend, she was told that she had protection under section 75 - and that her credit card provider would be able to get her money back. When she contacted her credit card provider, she was told that it could not help because section 75 only covers transactions between £100 and £30,000. Miss N complained, but the credit card provider stuck to this position. So she decided to refer the matter to us.

complaint upheld
Having looked at the detail of this case, we could see that the credit card provider had got it wrong. We explained that it is the total cash price of a product or service that must fall between £100 and £30,000.

Even though Miss N had only used her credit card to pay a deposit of £99, as the sofa cost £1000, the purchase would be covered by section 75. We therefore told the credit card provider to refund the £99 deposit Miss N had lost and pay £50 compensation to her for the inconvenience caused.

Not sure if there's been any actual legal ruling on the issue, I'll have a scout about.

[Amethyst]

Lloyds case does mention it ( https://publications.parliament.uk/p...031/lloyds.pdf - para 31 ) but not in conclusion, though it doesn't seem to have been disputed throughout the proceedings.

Liability under section 75 only arises where the cash price of the supply is over £100 but not more than £30,000 (section 75(3)). It arises even if the credit only relates to part of the price (as where the consumer pays part in cash or by cheque).

[unclebobby]

The legislation doesn't give a minimum amount you have to have paid on your card to be covered, just th(single item) purchase must be over £100 in total.

Here's a Financial Ombudsman decision on a deposit of £99 paid on a sofa costing over £100 which the balance was paid later ( or due to be )...

It's safer to pay over £100 on the credit card though ( you could pay it by credit card then pay that £100 off the credit card straight away ) and as per the example it is best to make the first payment by credit card, I don't know how it would work out if you'd paid for everything in case/cheque/BACS then paid a final penny on credit card to try get the protection of s75.



Not sure if there's been any actual legal ruling on the issue, I'll have a scout about.

Many thanks for that explanation. I'm guessing that little old me has asked a good question that is making the lawyers on this site scratch their heads

[Amethyst]

Congratulations ?

[unclebobby]

Congratulations ?

Only joking, I am extremely grateful for any help offered.

[unclebobby]

anyone else have any thoughts on this?

[Amethyst]

Do you have a particular circumstance in mind ?

[unclebobby]

anyone else have any thoughts on this?

3 months ago, I hired a plumber to fit my new bathroom. We agreed it would cost £2000 for the labour. I wanted to pay a deposit on my credit card to get s75 consumer credit act protection, but he told me he did not have the credit card machine with him and he would bring it another day.

During the work, problems arose, but was assured by the plumber he would deal with it- but he never did. The tiling was not flat and the shower door hadn’t been fixed correctly. He finally brought his credit card machine the day before he finished and I paid £100 on my card.

On his last day the plumber demanded that he be paid as he would come back on Monday to fix the problems, but he never turned up and he has since closed down the company. I contacted my credit card provider, Nationwide, to make a s75 claim and they declined it.

They said that the three-party relationship with Nationwide, me and the plumber, had not been established before the work began and that because I had known about the defects before I made a payment on my credit card, that to would invalidate s75 claim!

However, my understanding is that if I pay for any part of a bill (for a service or goods) with my credit card, I would be covered.

The legislation does not state when the payment needs to be paid, only that it can be for any part of the bill.

But the point is I wanted to pay for the builder on day one of the works to get s75 protection, but because he was so slow in bringing his credit card machine to me, it was significantly delayed.

Also, how would this be different to say another person in the same situation agreeing to only pay after all the work had been done and on the last day the plumber demands to be paid and promises to come back the following day to rectify the mistakes, and he doesn’t as he goes bust? Surely there would still be s75 protection?

I think this is really unfair. Does anyone have any advice on this?

[unclebobby]

bump

[Amethyst]

That is an interesting one - I’m with you, although there were issues they were due to be rectified and the purchase price was £2000 of which you had paid £100 by credit card. When the payment is made ( first or last payment of an instalment arrangement ) isn’t specified in the regulations so far as I am aware.

Are you you going to take it to the Financial Ombudsman ?

R0bpt2537 Any thoughts?

[pt2537]

That is an interesting one - I’m with you, although there were issues they were due to be rectified and the purchase price was £2000 of which you had paid £100 by credit card. When the payment is made ( first or last payment of an instalment arrangement ) isn’t specified in the regulations so far as I am aware.

Are you you going to take it to the Financial Ombudsman ?

R0bpt2537 Any thoughts?

UTTER NONSENSE. The CCA doesnt set the rules on when payment is made. Sadly the FOS is as much use as Jacob Rees Mogglodyte so its unlikely you will get anywhere there

[unclebobby]

That is an interesting one - I’m with you, although there were issues they were due to be rectified and the purchase price was £2000 of which you had paid £100 by credit card. When the payment is made ( first or last payment of an instalment arrangement ) isn’t specified in the regulations so far as I am aware.

Are you you going to take it to the Financial Ombudsman ?

R0bpt2537 Any thoughts?

yes I will

[R0b]

I'm inclined to agree with PT, the CCA as far as I can see does not state when the payment is to be made but the transaction (as I understand) would fall within section 12(b) i.e. a transaction to finance a transaction between yourself and the supplier. Section 187(2) also gives further guidance on section 12(b):

"187(2) A consumer credit agreement shall be treated as entered into in contemplation of future arrangements between a creditor and a supplier if it is entered into in the expectation that arrangements will subsequently be made between persons mentioned in subsection (4)(a), (b) or (c) for the supply of cash, goods and services (or any of them) to be financed by the consumer credit agreement

...

(4)The persons referred to in subsections (1) and (2) are:

(a)the creditor and the supplier;

(b)one of them and an associate of the others;

(c)an associate of one and an associate of the other'."

So in simple terms, the key question is that you must have intended that the transaction was financed by the credit card whether in whole or in part. The payment itself does not necessarily need to be made prior to the commencement of works, particularly if, for example, it is agreed that payment is deferred until completion of the works but is nonetheless intended to be paid by credit card.

Hope that helps