What is a Section 75 claim?
This refers to section 75 of the Consumer Credit Act 1974 which provides a purchaser with the right to claim a refund or damages from their credit card provider, rather than the supplier that actually provided the goods or services.
This law applies to purchases between £100 and £30,000 that have been made by credit card. This must be ‘per item’, so if you spent £300 on 6 individual chairs that are £50 each then you do not qualify for this protection. However, if the items were sold as a set of 6 for £300 then you would be entitled to make a claim under section 75.
If you use your credit card to make a part payment for a purchase – for instance if you’re paying a deposit now and then the rest later, then the value of the total purchase will still need to be less than £30,000.
For instance, if you agree with a building contractor that they will build an extension for £50,000 and you pay the first £5,000 by credit card then unfortunately this will not be covered, even though the actual payment on the credit card was between £100 and £30,000, the total value of the works was over the £30,000 limit.
If you pay your bill on time then it is always worth making purchases on a credit card so that you get the benefit of this free protection.
The protection gives you the right to claim damages from the credit card company when there has been a breach of contract or misrepresentation by the supplier. This can be particularly handy when the supplier is no longer in business, they’re based abroad or perhaps you just can’t get hold of them – in all these situations you are perfectly entitled to make a claim against the credit card company.
There is no legal requirement to present your claim to the supplier first, however this may be advisable as it can sometimes be the quickest way to get the outcome you want. Also if you want a replacement for an item, rather than a refund, then it is likely that only the supplier will be able to help with that.
If the supplier does not resolve the complaint to your satisfaction then you can bring a claim against the credit card company. This is usually achieved by filling in a specific form or writing to them.
If the credit card company does not adequately deal with your complaint then you can also refer the matter to the Financial Ombudsman, who has the power to insist that the credit card company pays damage to you and potentially also compensation for the inconvenience caused in not dealing with your claim properly in the first place. You can contact the Financial Ombudsman them on 0800 023 4 567 or by post at Exchange Tower, Harbour Exchange, London, E14 9SR.
Breach of Contract and Misrepresentation
In order to make a claim with the credit card company you will need to prove that the supplier has breached the contract with you or there has been some form of misrepresentation.
Misrepresentation is defined as a ‘false statement of fact’ which induced you to enter into a contract. This false statement may have been made innocently, negligently or even fraudulently.
If the supplier has innocently made a false statement of fact then you have the right to withdraw from the contract and receive a refund of any money previously paid or alternately claim damages for any foreseeable financial loss that you have incurred.
If the supplier fraudulently or negligently made a statement without a reasonable belief that it was true then you have the right to withdraw from the contract and receive a refund of any money previously paid or alternately claim damages for any financial loss that the incorrect statement has caused you (Regardless of whether those losses were foreseeable or not).
Sometimes there has been no false statement of fact, however the supplier has failed to carry out what was agreed and this may be a breach of contract. The Consumer Rights Act 2015 stipulates that goods must be:-
- Of Satisfactory quality (Section 9)
- Fit for a particular purpose (Section 10)
- As described (Section 11)
- Match a sample provided (Section 13)
And that services must be provided with:
- Reasonable care and skill (Section 49)
- A reasonable price (Section 51)
- In a reasonable time (Section 52)
If the supplier does not adhere to these requirements then they may have breached the contract. If a breach of contract has occurred then you have the right to claim damages for any foreseeable loss that you have incurred as a result of that breach.
There are of course other examples of a breach such as a supplier not completing work that they said they would do, goods not being delivered or goods being faulty.
The Supplier Ceases Trading
This law is particularly helpful where the supplier is no longer trading, perhaps because they have gone bankrupt or into administration. This wouldn’t matter, because you are still entitled to bring the exact same claim against the credit card company and they are obliged to pay out if there has been a breach of contract or misrepresentation (See above for more information).
This may for instance assist if you booked a flight ticket (for over £100) on a credit card and the travel company or airline stops trading. If you do not receive the flight you booked then there has clearly been a breach of contract and you would be able to claim a refund or damages from the credit card company instead.
How much can I claim?
The good news is that you’re not just limited to a refund, you’re entitled to claim damages, even if those damages are more than you originally paid on your credit card.
For instance, if you pay a company £10,000 to fit a new kitchen and they do a poor job then you can claim that they have not provided the services with a reasonable amount of care and skill contrary to section 49 of the Consumer Rights Act 2015 and they have therefore breached the contract with you. If you then have to pay an additional £2,000 to get the job finished to a reasonable standard then you can claim that cost back from the credit card company if you wish.
How Do I Make a Section 75 Claim?
You should start by contacting your credit card provider and asking what their procedure is for making a claim. It is likely that this will be an online or paper form that you need to complete. Alternatively you can use our free template letter.
You will need to give details of your claim including:
- What was purchased
- When you purchased it
- How much you paid
- What went wrong
- What sum you are looking to claim back