Section 75 of the Consumer Credit Act 1974: A Shield for Consumers

Section 75 of the Consumer Credit Act 1974 is a vital piece of UK legislation that offers significant protection to consumers when purchasing goods or services using credit. While the title might suggest a financial act from 1986, it's important to note that we're discussing Section 75 of the 1974 act, not a separate "S75 Finance Act 1986."

In essence, Section 75 establishes a principle of "equal responsibility" between the credit provider (typically a bank or credit card company) and the supplier of the goods or services. This means that if a consumer purchases something costing between £100 and £30,000 using their credit card or other regulated consumer credit agreement, and the supplier breaches the contract or goes bust, the credit provider is jointly and severally liable alongside the supplier. This offers a valuable safety net, allowing consumers to claim compensation from the credit provider even if pursuing the supplier directly is impossible or impractical.

To trigger Section 75 protection, a direct "debtor-creditor-supplier" relationship needs to exist. This generally means that the consumer must have used their credit agreement to directly pay for the goods or services. Using a credit card to withdraw cash and then using that cash to pay does not qualify. However, linked credit agreements, such as store cards used specifically for purchases within that store, are usually covered.

The benefits of Section 75 are wide-ranging. Imagine purchasing a holiday from a tour operator that then collapses before your trip. Under Section 75, you can claim a refund from your credit card company. Similarly, if you buy faulty goods that the retailer refuses to repair or replace, you can seek compensation from your credit provider. This applies even if the goods were bought from a retailer based overseas, provided the credit agreement was made in the UK. The protection extends to services as well, such as faulty building work or unfulfilled gym memberships.

Making a claim under Section 75 is generally straightforward. The first step is to contact the credit card company or lender, explaining the problem and providing evidence of the purchase, the fault, or the supplier's breach of contract. The credit provider will then investigate the claim. If the claim is successful, the consumer can typically recover the amount paid for the goods or services, as well as any consequential losses directly resulting from the breach. For example, if a faulty washing machine floods your kitchen, you might be able to claim for the cost of repairing the damage.

While Section 75 provides significant protection, it's not a universal solution. The purchase must fall within the £100 to £30,000 range, and the "debtor-creditor-supplier" relationship must be clearly established. Furthermore, consequential losses must be directly attributable to the supplier's breach. Despite these limitations, Section 75 remains a powerful tool for consumers in the UK, offering valuable recourse when things go wrong with credit-funded purchases.