James Walker: Credit protection means playing your cards right

Buying on a credit card gives you a number of rights under the Consumer Credit Act.
Buying on a credit card gives you a number of rights under the Consumer Credit Act.
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I’ve spoken to lots of people over the past few weeks who are worried about businesses going bust. From big airlines to retailers, it can be a real worry if you’ve handed over your hard-earned money only for the business to go bankrupt.

And with Christmas round the corner leading to many a rash purchase, one of the better ways you can cover yourself for lost, damaged or just plain rubbish goods and services – and firms going out of business – is to pay by credit card.

A word of warning

Buying on a credit card gives you a number of rights under the Consumer Credit Act – and used responsibly, credit cards can be incredibly useful. But it’s only worth taking one out if you make a real effort to pay it off every month. Debt on a card can spiral really quickly – so keep on top of it.

Section 75

This section of the Consumer Credit Act allows you to make a claim to the credit provider if the goods or services you buy don’t turn up or aren’t what you were told they were going to be. T&Cs apply of course. Most importantly, you have to spend over £100 and under £30,000 in full or in part (a deposit, for example) for the goods.

Paying a deposit

A really good benefit provided by section 75 relates to deposits. If you pay a deposit for an item on your credit card then use a different method to pay for the rest of the item, then you can claim for the full amount under the law. And because the wording of the act doesn’t specify a minimum, in theory, you could just pay a small amount. Watch out though, some firms do specify minimum deposit amounts on credit cards.

A few quirks

Much as we love the Consumer Credit Act, it’s pretty old (1974 originally) and though it’s been updated a few times, the way it’s worded doesn’t always fit with the way we live and shop today.

For example, you may not be covered if you’re paying for something using an electronic payment system like PayPal or Skrill. Many people have a credit card as the main way of paying through these websites. But the credit card companies dispute that the law covers this. I have to say, I don’t agree, but until this is addressed in a court case, it’s likely complaints about section 75 claims and payments by this method will be turned down.

Not what you thought?

The tricky part about the law is the bit where it says the goods or services being “misrepresented”. That’s a pretty broad term and it’s why there are lots of section 75 complaints (up by 46 per cent in the past six months at Resolver). There is a real grey area when it comes to goods being misrepresented or just not meeting expectations. For example, complaints about timeshares crop up a lot when it comes to section 75. In these cases, it’s really important to explain why you’ve been misled.

Buy direct

Remember that if you buy direct from a retailer or provider of services, you’re likely to be covered by the rules. If you buy through a third party (a ticket agency, for example or an online travel agent) you might not be covered.

Have you had a problem with a credit card? Get in touch.