Section 75 of the Consumer Credit Act 1974 (s.75) can be a life saver for consumers but one that is perhaps not as well-known as it should be. It applies when a consumer buys goods or services using credit, either offered with the product, or paid by credit card. S.75 applies to transactions of a tripartite nature – it bites when there are agreements involving a debtor (consumer), a supplier or retailer, and a creditor (often but not always a credit card company), which provides finance for the purchase of a particular product or service. The goods or services bought must cost more than £100 but less than £30,000.
If the supplier misrepresents the goods or services, or breaches the agreement, the consumer may be able to pursue the creditor instead of the supplier, using s.75. S.75 provides that the creditor is jointly responsible with the supplier for any misrepresentations and/or breaches of contract relating to the goods or services supplied. There is no need to pursue the supplier first. This is particularly useful in circumstances where the supplier has, for example, gone bust and is no longer able to provide the contracted goods or services.
Examples of how s.75 can assist
An example of a scenario in which s.75 may be helpful is in relation to the purchase of timeshares. A claim may arise in cases where the timeshare has been mis-sold, and/or there have been breaches of the timeshare agreement and the timeshare seller company has since become insolvent. If the purchase was funded under a debtor-creditor-supplier agreement then a claim for misrepresentation and/or breach of contract may be brought against the creditor, instead of the supplier.
S.75 can be of particular assistance if the creditor is in the UK, but the supplier is based out of the jurisdiction. If the consumer has no luck with the supplier, they can instead approach the creditor regarding their claim.
An important benefit of s.75 is that the consumer is protected for the entire cost of an item or service, even if only part of the cost thereof is paid using a credit card. This means that if a consumer pays a deposit in excess of £100 using a credit card, the entire purchase sum will be covered up to £30,000.00.
If the cost of the goods or services exceeds £30,000 then protection is offered under section 75A, rather than s.75 in relation to a breach of contract by the supplier. S.75A introduces an upper limit for claims of £60,260. Under s.75A, the finance must be linked to an item/service by a formal debtor-creditor-supplier agreement, rather than a purchase using a credit card, for the purchase to be covered. In addition, the consumer has to show one of the following:
- that the supplier cannot be traced;
- that the debtor has contacted the supplier but the supplier has not responded;
- that the supplier is insolvent; or
- that the debtor has taken reasonable steps (but not litigation) to pursue his claim against the supplier but has not obtained satisfaction for his claim.
Factors to consider
The Consumer Rights Act 2015 implies certain terms into a contract for goods or services. Goods must be of a satisfactory quality, fit for purpose, as described and match any samples provided. Services have to be undertaken with reasonable care and skill, at a reasonable price and in a reasonable time frame. A breach of these requirements may constitute a breach of contract and give rise to s.75/s75A claims.
As the creditor is only liable for breaches of contract and/or misrepresentations by the supplier under s.75, the creditor will not be liable for breaches based on some other cause of action, such as breaches by third parties. This means that it is unlikely that goods purchased using PayPal will be covered, as the transaction financed by the creditor is that between the debtor (consumer) and PayPal, and not the debtor and the supplier. Paypal acts as the payment intermediary by transferring the money from the consumer’s account to the supplier’s account.
Similarly, caution has to be applied with ticket agencies and online retailers that do not provide the things that they are selling, such as holidays. Such transactions are not usually covered by s.75.
How we can assist
The ongoing pandemic and its aftermath are likely to result in a surge of claims for breaches of contract, with suppliers failing to supply goods/services purchased. In these circumstances, reliance on s.75/s75A by the buyer may be possible.
If you are facing problems with goods or services that you have bought costing £10,000 or more, Edwin Coe is well placed to assist. We have extensive experience of assisting consumers make s.75 claims, often as a group with others. We can advise on After The Event insurance and funding for appropriate claims (on which please see our earlier blog here). Please contact Zahira Hussain, Valerie Sweeting or another member of the Group and Commercial Litigation team if you are thinking of making claim.
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Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.
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