What is Section 75 of the Consumer Credit Act?

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Section 75 of the Consumer Credit Act is a detailed legislative framework existing in the UK.

It holds credit card issuers accountable for reimbursing cardholders or covering any consequential losses incurred due to misrepresentation or breach of contract. Additionally, contingent liability may be applicable as well.

In effect, credit card issuers share joint responsibility if a consumer faces problems with a purchase made via their credit card. The Act specifies that before a creditor can be deemed liable, the debtor must demonstrate a valid claim for misrepresentation or breach of contract against the supplier.

Under Section 75, cardholders are entitled to make a claim for purchases that exceed £100, but are less than £30,000. This protection extends to the full purchase amount, even if only a deposit was charged to the credit card.

What Does Section 75 Cover?

Cardholders benefit from the protections of Section 75 in cases of misrepresentation or breach of contract. This can apply in a number of circumstances; for example, if you made a purchase, but the item never arrived, was defective, or did not match its description.

Cardholders are entitled to make a claim for a consequential losses that arises from these failures. For example, if you find yourself on holiday and the airline you booked for your return journey goes under unexpectedly, you could seek reimbursement for extra hotel nights while you arrange for a new flight.

If you’re in the UK, your eligible for a Section 75 claim if:

  • you made a credit card deposit (even if it is only 1p) for a purchase where the total cost is over £100 but under £30,000.
  • the product is not as described.
  • the item in question is faulty.
  • you have not received the product.
  • the retailer has gone out of business or is declared insolvent.
  • you have not received the item.
  • you faced additional costs due to a cancelled event (such as accommodations or transportation tickets).

However, there are some circumstances in which Section 75 protections do not apply. These include:

  • items that do not meet the monetary threshold.
  • cases in which a buyer withdraws cash from an ATM.
  • the claimant is not not a private individual.

How Are Section 75 Claims Different From Chargebacks?

While both Section 75 claims and chargebacks offer consumer protection, they function through different mechanisms and offer distinct benefits.

Section 75 claims rely on consumer credit legislation that holds the credit card provider jointly liable for the transaction. This means you can pursue a claim directly with them for items that meet the eligibility criteria. This can cover the full purchase amount, including consequential losses.

In contrast, chargebacks are a reversal of a transaction initiated by the cardholder through their bank or card issuer, often used for issues like fraud or disputes with merchants. Chargebacks typically have a more limited time frame for claims and may not cover additional costs like Section 75 claims do. The time limit for claiming a chargeback varies between 45 and 540 days after the purchase, depending on the reason for the dispute. However, Section 75 claims can be made up to 6 years after a transaction.

Hence, while both provide avenues for recovering funds, Section 75 claims can offer broader protections in certain situations.

How to File a Section 75 Claim

It is advisable to begin by attempting to address the problem directly with the retailer. While it is not mandatory to collaborate with the retailer under Section 75, doing so may allow you to recover your funds more quickly if they are able to offer a refund or resolve your issue directly.

If this does not work, the next step is to contact the credit issuer. Make sure to gather the following documents before reaching out:

  • Receipt or proof of purchase
  • Any relevant terms and conditions related to the purchase
  • Evidence demonstrating that the goods or services were either not delivered, damaged, defective, or misrepresented
  • Documentation showing that you have attempted to recover the loss from the retailer
  • A summary of any response received from the merchant
  • All related paperwork concerning your claim
  • A detailed explanation of why you believe a breach of contract or misrepresentation has taken place

When reaching out to the credit issuer, it’s important to inform the customer service agent that you wish to “file a claim in accordance with Section 75 of the Consumer Credit Act.” The issuer will then investigate and try to resolve the claim with the retailer themselves.

Have Additional Questions?

The Consumer Credit Act is an intricate body of law, with Section 75 being a mere facet of it. Misunderstanding any aspect of this regulation could lead to significant repercussions. If you have further inquiries regarding Section 75 of the Consumer Credit Act, please reach out to connect with our team of international specialists.