Section 75 Claims
The majority of people know that if they are buying something, particularly online, they have greater protection if they use a credit card. When pressed, they may be able to say that they would have a “section 75 claim” if something went wrong with the transaction, without being able to explain what this actually is. This article aims to explain precisely what this means, and what the rules around this area of law are, in relation solely to credit card purchases.
The central rule is section 75 (unsurprisingly) of the Consumer Credit Act 1974 (the “Act”). It specifies certain types of transactions to which the section applies, but for this article we shall focus on “debtor-creditor-supplier” agreements. This definition encompasses purchases made on a credit card. The item being purchased must cost more than £99.99, but less than £30,000.01. It applies to goods and services.
Section 75 in Action
To illustrate how the section works, let us imagine that you have gone into a shop to buy a gas oven. You are told by a salesperson that a particular oven is gas, and on that basis decide to buy it. You notice at the checkout that the shop has a “14 day no quibble, 100% money back guarantee”, which a customer can take advantage of if they write to the shop within 14 days of delivery of the goods. You pay £50.00 on your credit card, and the balance of £300.00 in cash. It is worth noting that it is the value of the item that must be more than £100.00, not the amount that you paid on your credit card.
The next day you receive the oven at your house, and are disappointed when the fitter points out that the oven you have purchased is, in fact, electric. You tell the fitter to take the new oven away, and write that day by recorded delivery to the shop to exercise your rights under the 14 day guarantee. The shop writes back, saying that whilst the salesperson was wrong in saying it was a gas oven, you should have been more careful, and that it does not intend to refund you.
So far, so good in terms of section 75(1) of the Act (although you will have to get used to microwave meals for the time being). You have paid by credit card, and so are party to a debtor (you) – creditor (credit card company) – supplier (shop) agreement.
You have claims against the shop in terms of:-
- their misrepresentation, that the oven was gas, that made you enter the contract; and
- their breach of contract, in that they refused to honour the “14 day no quibble, 100% money back guarantee”.
This is important, as the two triggers in section 75(1) of the Act are misrepresentation and breach of contract.
You walk past the shop a few days later, and are horrified to see that the company running the shop has gone into liquidation. You worry that your chances of getting your money back from the shop are now non-existent.
Next Steps
You are now out of pocket by £350.00, and have not had a decent meal in a week. Your first step should be to write to your credit card company explaining that you are of the view that section 75 of the Act has been triggered. You should point out why you think there has been misrepresentation and a breach of contract, and it may assist if you provided them with copies of the contract, the 14 day guarantee and your letter exercising your rights under the guarantee. You would be claiming the full £350.00 back, and not just the £50.00 you paid on your credit card.
The credit card company may, at this point, simply refund your money. They would then probably pursue the shop to recover their loss, and you would be back on the hunt for a gas oven.
Alternatively, the credit card company may write back to you stating that, for whatever reason, they do not think that they require to pay you. They will likely suggest you contact the Financial Ombudsman if you want to challenge their decision. That may be an option open to you, but there will likely be tight timescales for applying to the Financial Ombudsman. Let us imagine that you have inadvertently missed that timescale, and so now cannot apply to the Financial Ombudsman.
The company you bought from has gone into liquidation, and the credit card company will not respond to your letters. Do you simply need to “lump it”, and try to put it behind you?
A New Oven
No, you do not. One of the overlooked aspects of section 75 of the Act is that it makes the credit card company “jointly and severally liable” with the shop to you. In the Supreme Court case of Durkin v DSG Retail Limited and another [2014] UKSC 21, Lord Hodge held at paragraph 19 of the unanimous judgment that the ordinary meaning of the words of section 75(1) of the Act:-
“...give the debtor who has a claim against a supplier a “like claim” against the creditor. Thus a debtor, who has a right of action against the supplier for misrepresentation or breach of the contract of supply, can sue the creditor for that misrepresentation or breach of the supply contract. In other words, the creditor is concurrently liable for the supplier’s breach.”
In reality, what this means is that you are perfectly entitled to raise a court action directly against the credit card company. You would tie them to the shop by way of section 75 of the Act, and then plead your case against the shop. If you can demonstrate on the balance of probabilities that either there was misrepresentation that caused you to enter the contract, or that the shop has breached the refund element of the contract, the court will likely grant decree in your favour against the credit card company in the sum of £350.00, plus interest and expenses.
Then you can stop buying microwave meals.
Contact our Litigation Lawyers
Should you have problems with goods or services that you have bought, our litigation team can ensure that you receive the best possible outcome. This article is for general information only. Nothing in this article should be taken as legal advice. If you have any queries on the content of this article please contact us.
