Section 75 of the Consumer Credit Act 1974 protects a consumer in specific circumstances when they make a purchase using certain types of consumer credit. Over the last few years, we have seen a significant increase in the number of complaints involving section 75. This suggests that consumer awareness of the protection it can offer is increasing. However, section 75 does not provide protection for every transaction made using a credit card, and the law in this area is complicated.
Our online technical resource, goods and services bought with credit (including section 75 and section 75A), gives more information about how we can usually help with complaints relating to section 75.
The case studies that follow show just how varied these complaints can be. Before reading them, it is helpful to note three main requirements of section 75.
During a holiday in the Canary Islands, Mrs S attended a presentation about membership of a holiday club. During the presentation, the holiday club provider said that new members would receive a certificate from a third party "cashback" company - which would guarantee that they would be refunded the cost of membership after five years.
Mrs S decided to take out membership and paid the supplier £3,500 by credit card. However, when she received the certificate, Mrs S realised that she was not guaranteed to get all her money back and could actually receive nothing.
Mrs S contacted the holiday club provider by phone and email, but received no reply. So she decided to contact her credit card provider to make a claim under section 75. The provider said it could not uphold the complaint because it was based purely on Mrs S's "recollection of events". Mrs S was unhappy with this response and complained again. When her second complaint was rejected, she decided to refer her case to us.
We looked at the evidence carefully and listened to the arguments for both sides. We also took into account information that was publicly available about other customers of the same holiday club provider who were pursuing legal action against it.
Having assessed the evidence, we were satisfied that Mrs S had been assured by the holiday club provider that she would definitely receive all her money back from the "cashback" company. We were also satisfied that she would not have taken out the membership had it not been for this assurance.
We therefore concluded that Mrs S did have a claim for misrepresentation by the holiday club provider. We told the credit card provider to refund her the cost of the membership, plus interest.
During a holiday in the Mediterranean, Mr W decided to take out membership of a holiday club. He attended a presentation and was told about the various deals on flights and accommodation that members would be offered. He paid for the membership by credit card.
When he returned home, Mr W discussed the membership with his son. His son suggested that it was not good value for money. He pointed out that he could get similar deals by carrying out his own research online, without being a member of a holiday club. Mr W immediately contacted his credit card provider and explained the situation, asking them to refund the money as a claim under section 75.
The credit card provider refused. It said there had been no breach of contract or misrepresentation. When Mr W complained, it gave the same response. He therefore decided to refer his case to us.
complaint not upheld
Having looked at the evidence provided by both sides, we established that Mr W had never suggested that the holiday club had been misrepresented to him - or that there had been any breach of contract. His argument was simply that it was not good value for money. While this may have been true, we explained that section 75 does not offer protection against this. We did not uphold the complaint.
Miss N decided to buy a leather sofa for £1,000 from her local furniture store. She paid £99 on her credit card as a deposit, with the balance due on delivery a few weeks later. Unfortunately, the store went out of business before it delivered the sofa.
When Miss N mentioned the situation to a friend, she was told that she had protection under section 75 - and that her credit card provider would be able to get her money back. When she contacted her credit card provider, she was told that it could not help because section 75 only covers transactions between £100 and £30,000. Miss N complained, but the credit card provider stuck to this position. So she decided to refer the matter to us.
Having looked at the detail of this case, we could see that the credit card provider had got it wrong. We explained that it is the total cash price of a product or service that must fall between £100 and £30,000.
Even though Miss N had only used her credit card to pay a deposit of £99, as the sofa cost £1000, the purchase would be covered by section 75. We therefore told the credit card provider to refund the £99 deposit Miss N had lost and pay £50 compensation to her for the inconvenience caused.
Mrs T decided to buy a property overseas to rent out as holiday accommodation. The property cost £162,000. It was still being built and Mrs T was required to pay a deposit of £3,000 to the building company. She paid this using her credit card. Unfortunately, the property was never completed and Mrs T found that the company, which was based overseas, would not return her calls.
She decided to make a claim to her credit card provider under section 75. However, the provider rejected her claim, explaining that the amount of money involved was too high to be covered by section 75. Mrs T complained, saying that the transaction had only been for £3,000, but the provider refused to change its mind. Mrs T referred her complaint to us.
complaint not upheld
We explained to Mrs T that section 75 does not provide protection for every transaction made using a credit card. It does not apply to claims relating to items costing less than £100 or more than £30,000.
Although we noted that Mrs T's deposit was within these limits, the total price of the property - £162,000 - fell outside them. We sympathised with Mrs T's situation, but we agreed with the credit card provider that the transaction was not protected by section 75 and did not uphold the complaint.
Mr J had been having difficulty getting a clear picture on his TV through his aerial. He was unable to view one particular channel altogether. To solve the problem, he had a satellite dish installed, bought a set-top box and paid a monthly subscription.
Mr J then discovered that he could use his dish to receive free digital channels. While he was looking into his options, he also discovered that replacing his TV with a more up-to-date model would mean he could dispense with his set-top box. So he decided to go ahead and buy a new TV with integrated satellite services.
He went to his local electronics store. When he explained what he was looking for, the sales assistant told him that he would be better off with a different kind of set-up altogether - one that provided free-to-air channels through an ordinary aerial. He said that this would solve the problems that Mr J had experienced.
When Mr J got the TV home, although the picture was clearer, the problems continued. When he contacted the retailer, they refused to refund him, but said they would exchange the TV. However, they did not sell the type of TV that Mr J had originally wanted.
Mr J decided to make a claim to his credit card provider under section 75, but it was refused. A second complaint received the same response. The provider said that Mr J could not prove what he had been told by the sales assistant. Mr J referred his complaint to us.
We needed to decide what, on balance, was most likely to have happened when Mr J visited the electronics store and spoke to the sales assistant. So we looked at the background to the case and assessed the evidence provided by both sides.
We noted that Mr J already had a satellite dish and that he had only recently cancelled his subscription. Mr J's explanation of the discussion he had had with the sales assistant was persuasive and had been consistent throughout his complaint to his credit card provider and his complaint to us.
We therefore considered it likely that he had gone into the store intending to buy a TV with integrated satellite services, and that he had only been persuaded to buy the alternative model on the basis of the representations made by the salesman.
We upheld the complaint. We told the credit card provider to take away the TV and refund the cost to Mr J.
Mr R booked a week's holiday at a caravan park on the south coast, and paid using his credit card. When he arrived, he was disappointed to find that the park did not have all the spa facilities that he had expected. He contacted the holiday company to ask for a refund, and when it refused, he requested a refund from his credit card provider under section 75. This was also declined.
Mr R then complained to his credit card provider, saying that the holiday company had advertised a "luxury spa", which should have included a sauna and a steam room. Mr R said that he would have looked elsewhere for accommodation had he not been "misled" by the holiday company. The credit card company did not change its mind and Mr R referred his complaint to us.
complaint not upheld
We explained to Mr R that for the credit card provider to be liable under section 75, we would need to be satisfied that the holiday company had misrepresented the facilities available at the caravan park. So we looked at the holiday company's website. We found no suggestion that there would be a sauna or a steam room - either in its written descriptions or in photographs.
We noted that the holiday company did refer to the facility as a "luxury spa", and that it included a swimming pool, hot tub and treatment rooms. It appeared to us that Mr R had assumed that it would include a sauna and a steam room, facilities that he expected to find in a "luxury spa". However, given the clear information that the holiday company had provided about exactly what facilities were available in the spa, we did not consider that it had misrepresented things. We did not uphold the complaint.
Mr C saw an advert on the internet for a tailor-made suit service. A tailor would visit his home to measure him, and the suit would be delivered a week later. Mr C paid £799 to the tailoring company using his credit card. When the suit arrived, it did not fit properly and he emailed the company straightaway. The company responded a few weeks later, saying it would make the necessary alterations free of charge and made an appointment to do so. However, the tailor did not keep the appointment.
Mr C complained again, but had no luck with the tailoring company. He decided to contact his credit card provider to ask for a refund under section 75. The provider refused, saying that there was no evidence that the suit did not fit when it was delivered. Unhappy with this response, Mr C complained to the credit card provider. When it stuck to its original position, he referred the matter to us.
We looked at the evidence provided by both sides, which included photographs of Mr C in the suit. In our view, the suit did not fit well. The jacket sleeves were too long and the trouser legs far too short. We were satisfied that Mr C had given the tailoring company the chance to put things right, but it had not followed through on its offer to make adjustments to the suit.
We noted the credit card provider's argument that there was "no evidence the suit had not fitted at the time it was delivered". However, we considered that there was good evidence to show this. Mr C had contacted the tailoring company immediately, and had there not been a genuine problem, we could not see why the company would have offered to make adjustments. Mr C had been promised a suit tailored to fit him, and had clearly not received what he had paid for. We therefore concluded that there had been a breach of contract and upheld the complaint. We told the credit card provider to refund Mr C the cost of the suit, plus any charges connected with the transaction.
Mrs H decided to take her family on a day trip to Lapland. She booked online and paid using her credit card. During the trip, one of the planned excursions - a visit to a "magical elves' house" - was cancelled. Afterwards, when Mrs H complained to the travel company, it acknowledged her disappointment and offered to refund her £750.
Mrs H was not satisfied with this and thought she should be refunded the entire cost of the trip. She said that the trip had been misrepresented to her and that the travel company had breached the contract. So she contacted her credit card provider to make a claim under section 75. The provider told her that the travel company had already compensated her sufficiently and that it had no further obligations under section 75. Mrs H then complained to the credit card provider, and when it did not change its position, she decided to refer her complaint to us.
complaint not upheld
We established that Mrs H and her family had been on all but one of the planned excursions. The visit to the "magical elves' house" had been cancelled at the last minute due to exceptionally heavy snowfall. Given that we were satisfied the excursion would have been available had it not been for the unusually bad weather conditions, we did not consider that the trip had been misrepresented to Mrs H.
We considered that the £750 offered by the travel company was fair and reasonable compensation for the cancellation of the excursion in the circumstances, and so we did not require the credit card provider to make any further payment to Mrs H.