Tuesday 3 May 2011

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 (aka FOS -see link in sidebar under "Financial Regulators (UK)"). 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?

INVESTMENT DISCLOSURE: None. Still in cash, and missing all those day-trading opportunities.

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.


James Higham said...

Could you crosspost this? It seems important to me. £100 eh?

Sackerson said...