Credit cards and consumer protection

As reported in the Daily Mail today, you get additional consumer protection if you make a purchase of an item worth £100 or more by using your credit card.

The Mail piece is based on details on page 16 in the latest issue of “Ombudsman News“, a regular publication by the Financial Ombudsman Service. In the case cited, a student had bought what turned out to be a faulty computer and when she complained, the shop advised her to contact the manufacturer; but she didn’t have time to do this, so she sought redress from the credit card issuer instead. When the issuer refused, the FOS ruled in the student’s favour.

Section 75 of the Consumer Credit Act 1974 (current version) states:

“If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor.”

“Jointly and severally” means that the consumer does not have to deal with the shop or the manufacturer first, he/she can get the money back from the credit card company; but the supplier can also be dragged into the action, if the consumer so chooses.

This does not apply if the purchase is via a “non-commercial agreement”, or if the item cost less than £100 or more than £30,000, or if the credit card terms have been breached (e.g. by exceeding the credit limit on the account).

In the definitions section of the Act, ““non-commercial agreement ” means a consumer credit agreement or a consumer hire agreement not made by the creditor or owner in the course of a business carried on by him” – in other words, loosely speaking, the transaction has to have been commercial rather than private.

Worth buying a car from a dealer this way, perhaps?

6 comments for “Credit cards and consumer protection

  1. May 4, 2011 at 6:55 am

    You may find a dealer imposes an extra charge for paying by credit card, though…

  2. May 4, 2011 at 8:19 am

    I was always under the impression that car dealers always refused credit cards, preferring already drawn funds such as a bankers draft or debit cards?

    • May 4, 2011 at 9:00 am

      No, they will take them (at least, those I’ve dealt with) but you’ll pay extra.

  3. Sackerson
    May 4, 2011 at 4:02 pm

    Could still be worth it – and under current economic circumstances haggling could be worth a try too.

    Cars was only a suggestion / example.

  4. Wolfie
    May 4, 2011 at 8:44 pm

    I always use credit cards when booking holidays and purchasing online because of the protection it affords. Good to see the law tested in the consumer’s favour.

    Thanks for the update Sackers.

  5. May 4, 2011 at 9:09 pm

    Protection is a valid reason, as is paying off your balance monthly but that favours a smaller percentage of society. For most, they’re a disaster and credit in general has helped up prices to unrealistic levels plus put power in the hands of the banksters.

    The credit culture goes hand in hand with the debt culture.

Comments are closed.