Credit where and when it is due
25/10/16 As Christmas approaches, it's likely you'll be spending more.
You may be buying presents for family and friends to put under the tree, splashing out on food for the big day, booking a party night out with friends or paying for flights or train tickets to go on a winter break or visit relatives.
But whatever you are purchasing, there's one key rule to remember at this time of year - and throughout the whole 12 months too - and that's to use a credit card to pay for it all.
Now before I sound like I'm encouraging people to get into debt, of course, that is not what I mean. Only ever spend on a credit card an amount you can afford to pay back. But buying with a credit card offers you a level of protection should something go wrong with your purchase that using a debit card does not.
And that means that if you order something with a company that then does not deliver the goods, buy a ticket for an event that is suddenly cancelled or book flights and trains that then don't leave or go off track, you will be covered - as long as your purchase is more than £100 and less than £30,000.
This is a legal protection so it's not something anyone can get out of but there are various rules to be aware of that you must adhere to.
The law itself is known as Section 75 of the Consumer Credit Act and it dates back to the 1970s. What it means in simple terms is that under British law, the credit card issuer or provider is jointly liable with the retailer or person and company offering the service if something does go wrong.
As I said previously, remember this does not apply to debit cards and it doesn't cover all aspects of credit either. Always check your own agreements carefully and if needs be, take advice.
So what can you do under Section 75? Here are some key points to know:
- The law applies to a single item costing more than £100. This must not include fees such as for delivery or booking.
- You can claim a refund from your credit card company if any refund is delayed, refused or not forthcoming.
- There is no need to have paid the whole total for goods or services on the card. Even a deposit is enough if it's more than £100. You'd even get protection against the whole amount if £100 or more was on the card and the rest was paid in another way.
- You may not realise this, but because the credit provider has joint liability, you can contact them first or at the same time as the place you are in dispute with. You don't need to wait to speak to the latter first.
- You must speak to the provider who issued your credit card or credit agreement, for example, a bank financial institution or store card. You do not speak to the well-known brand marks behind what type of card it is or the shops where you took out the credit.
- Even if your account has been closed down, you can still make a claim.
So what else do you need to know?
Well firstly, this law is very clear and on your side. In fact, it's one of the best consumer rights laws out there and many people do not even know about it, let alone use it.
When you get in contact with the credit card, it is likely you will have your money refunded quickly and easily but there is never a guarantee against problems, even when the law is so clear.
So remember, if you are having problems then Resolver.co.uk can help. You can use our website or iOS/Android apps to raise a case and then fill in some simple details and send off our free and independent template email to ask for a resolution.
And always remember to state the reason you are claiming: Under Section 75 of the Consumer Credit Act.
What drawbacks are there?
Well like I said, Section 75 only refers to credit and not debit. So paying with a debit card or paying on credit for purchases under £100 are not covered. There are also other exclusions such as charge cards.
It is also difficult - although not always impossible if money has been paid direct to the seller - to use Section 75 when paying through a third party such as PayPal.
Additional cardholders making purchases may also fail to claim under Section 75 so Primary cardholders should always make the big purchases to ensure they qualify.
There is hope though for debit card purchases and those on a credit card that are under £100. It is a process called Chargeback.
If you have a problem such as missing goods, faulty products or a purchase from a company that has gone bust, you can ask your card provider to reverse a transaction but it is not enshrined in law and there are no guarantees you will get money back. There are also other rules on chargeback such as time limits so you need to research the individual rules appropriate to your own case and circumstances.
Is there any other redress available?
Yes, if you are still having issues under Section 75 with the credit provider and believe you have a valid claim, you can escalate your case to the Financial Ombudsman Service for an independent assessment. You will usually have to wait eight weeks from submitting the claim to do this. You can escalate your case automatically using Resolver.co.uk and the system will guide you through the timeline and process