Section 75 for business purchase

Drfollicle

Hi there,

I'm new to this forum and need some advise !, i recently submitted a section 75 claim for a purchase for defective goods i purchased for my business. However Tesco Bank have responded with the following.....

Section 75 provides that, under a specific set of circumstances, a consumer may seek to recover money paid under a contract with a supplier from their credit card provider. In this instance, the goods purchased were for that of your business. The transaction is therefore not deemed to be a consumer purchase for your personal use and is not covered under Section 75 of The Consumer Credit Act 1974.

I take it this is correct, however some time ago i did submit a claim under the same circumstances to Halifax and it was approved.

Any assistance much appreciated.
P

molerat

Tesco are correct, you probably just got lucky with Halifax - did you let them know it was a purchase for business use ?

chanz4

Consumer Credit Act gives it away

agrinnall

chanz4 wrote: »

Consumer Credit Act gives it away

Exactly, you don't have to read any further than the first word to know it does not apply to businesses.

chattychappy

A couple of issues here.

If a company makes the purchase and you use a personal card to pay for it, then clearly the "chain" is broken - ie the tranasction does not fit S75(1).

If a business has its own credit card, then again not covered - because these are not regulated by the CCA1974 (S8 - a business is not an "individual").

If cardholder enters into a contract but uses the purchase for business - eg a flight ticket (where the contract is with the passenger, despite the opportunity to reclaim from an employer) or you are self-employed then I don't see where the Act makes any exception. You are still a consumer. In doing your consumption, you are creating an expense that you can reclaim or set against your tax.

Where it is more tricky is where you are self-employed buying stuff for your business. Or buying something in your own name but really it is directly for the business - eg you are acting as some kind of agent when you make the purchase.

I'm not aware of any case law or reasoned FOS ruling to say "business purchases are not covered". If you google, websites might say state this, but do not cite sources. In any case, as there are different types of purchase, any such statement is likely to be flawed.

Perhaps that's why the OP had differing experiences from the two cards - because the situation is unclear.

Certainly, just because the Act has as its short title "Consumer Credit Act" doesn't mean it's not covered. The title of an act is an aid to interpretation - but does not override the provisions contained. Titles of acts are often inconsistent with the provisions. Eg the "Deregulation Act 2015" includes new regulations as well as old.

Section 75 itself makes no exception for business purchases. It could have done - it makes other exceptions (eg purchases under £100). It refers to "agreements" - being S12(b)/(c) consumer credit agreements as per S8 subject to exceptions in S16. What is key, in my opinion, for S75 to apply here is not the nature of the transaction but the nature of the agreement. If the OP has a normal credit card, then it will be an agreement regulated by the Act, so (s)he should be covered.

So, OP. Did a company buy the goods and you paid for it on your CC, ie there is there is a Ltd company on the invoice? Then I agree with Tesco.

Else I would go back to them and ask them, by reference to S75, where does it say that goods puchased must be "for personal use", asserting that S75 does not refer to "consumer purchases" - all that is relevant is that the cardholder made the purchase and the agreement is regulated by the CCA1974.

One further thought: if the T+Cs of the CC say you mustn't use it for business purchases, then they could argue the transaction isn't covered. But, so far, they haven't tried that!

derps

chattychappy wrote: »

.

Your post is right and cool etc. and I'm sure what I have to say isn't relevant to the OP but because I'm an insane pedant I want to disagree slightly as the Consumer Credit Act does specifically rule out certain types of business:

1. Credit cards issued to limited companies are not covered as per Section 8 (read with definition of "individual" in s.189)

2. Section 16B "Exemption relating to businesses" provides that the Act doesn't cover credit agreements "wholly or predominantly for the purposes of a business" if the credit limit is over £25k so credit cards issued to individuals for business use with high credit limits are exempted, too.

There are others exemptions relating to business, too, but they're almost certainly too remote to be relevant.

chattychappy

derps wrote: »

1. Credit cards issued to limited companies are not covered as per Section 8 (read with definition of "individual" in s.189)

Indeed, as I noted. Perhaps the OP needs to confirm that the Tesco card was a normal consumer card.

derps wrote: »

2. Section 16B "Exemption relating to businesses" provides that the Act doesn't cover credit agreements "wholly or predominantly for the purposes of a business" if the credit limit is over £25k so credit cards issued to individuals for business use with high credit limits are exempted, too.

Yep, it comes down to the nature of the agreement, rather than the specific transaction.

Tesco didn't rely on either of the above to reject the claim.

patw66

Some bad information here.
The consumer credit act includes sole traders, small partnerships and unincorporated companies as 'individuals' for section 75 protection.
This from issue 62 of ombudsman news
For Section 75 to apply, in the first instance the following four conditions must all be satisfied:

• The cash price of the goods or services bought by the consumer must be over £100 and not more than £30,000.
• The amount of credit provided to the consumer towards the purchase must not exceed £25,000, and must have been provided to an 'individual' (which includes sole traders, small partnerships and unincorporated businesses, as well as ordinary consumers).
• The provider of credit must be in the business of lending money, and the credit agreement must have been made in the course of that business.
• The credit must have been provided to the consumer under pre-existing arrangements between the provider of credit and the supplier of the goods and services.

PeacefulWaters

patw66 wrote: »

Some bad information here.
The consumer credit act includes sole traders, small partnerships and unincorporated companies as 'individuals' for section 75 protection.
This from issue 62 of ombudsman news
For Section 75 to apply, in the first instance the following four conditions must all be satisfied:

• The cash price of the goods or services bought by the consumer must be over £100 and not more than £30,000.
• The amount of credit provided to the consumer towards the purchase must not exceed £25,000, and must have been provided to an 'individual' (which includes sole traders, small partnerships and unincorporated businesses, as well as ordinary consumers).
• The provider of credit must be in the business of lending money, and the credit agreement must have been made in the course of that business.
• The credit must have been provided to the consumer under pre-existing arrangements between the provider of credit and the supplier of the goods and services.

Welcome. Three days later and you'd have hit the anniversary date of the last time anybody posted on this thread.

patw66

I joined the forum after a google search relating to section 75 issues. This thread came toward the top of the search result, potentially giving bad advice to anyone searching for s.75 issues.
As the thread contained such inaccurate advice from the 'arm chair experts' I felt compelled to join the forum just to put the correct interpretation on the use of the word 'individual' as used by the CCA.

Appreciate that it is a late reply, but in the circumstances I am unapologetic. If that worries you - get over it.

PeacefulWaters

patw66 wrote: »

Appreciate that it is a late reply, but in the circumstances I am unapologetic. If that worries you - get over it.

It doesn't worry me in the slightest. But resurrecting old threads isn't particularly good form.

The "be nice to newbies" advice works well as a two way street.