Section 75 protection for supplementary cardholders

gwapenut

Hi, quick question, does anyone know for sure whether S75 protection applies to both main and supplementary cardholders?

Chrysalis

it should do as both are paid with credit.

battyboimatt

Not always, S75 can be tricky for suplimentral card holders, it depends. For example if I bought a car on a credit card as the additional holder and the car was for my use only and the main card holder didnt gain any benefit from it and then the care broke, then no S75 wouldnt cover it as the conttract was with the suplimental card holder not the main card holder.

Same for example if I run up 10K as the supplimental card holder and then decided I wasnt going to pay, it would then be the responsability of the main card holder and they would chase them not the supplimentray card holder.

eddddy

Unfortunately, you're looking for a simple answer to a complex question.

The law requires a Debtor-Creditor-Supplier (DCS) relationship to exist. So you should get s75 cover whenever a DCS relationship exists, irrelevant of whether the purchase is made by the 'main card holder' or an 'additional card holder'.

So if you make a section 75 claim (relating to the 'main card holder' or 'additional card holder), usually the following happens:

1. You make a claim from the bank. The bank decides whether a DCS relationship exists.

2. If the bank says "No" - you can ask the ombudsman to decide whether a DCS relationship exists.

3. If the ombudsman says "No" - you can ask a court to decide.


The bank, ombudsman and court will each look at the details of the case.


FWIW, here are 2 examples of purchases by additional card holders were the Ombudsman decided that no DCS relationship existed (so the s75 claims were unsuccessful):

http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=118964
http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=27169

And here is an example of a purchase by an additional card holder were the Ombudsman decided that a DCS relationship existed (so the s75 claim was successful):

http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=117089




Edit to add...

There are also other criteria... like there must be breach of contract or misrepresentation for a s75 claim - but I guess that's not the point of this question.

gwapenut

Very interesting replies, thank you all. I had a vague recollection about such quirks, but couldn't remember whether they applied to bundled extras such as free insurances / warranties, or the S75 protection itself.

rivergold

This is a timely discussion for me. A group of us are about to book holiday accommodation, and someone else in the group will be handling the booking. If we pay using my card (because of exchange rate benefits) then do I have S75 protection as I will have use of the accommodation, or will I not because the group booking is in someone else's name as the lead?

chattychappy

The principle is that the primary cardholder must be in contract with the merchant - ie make the purchase. Otherwise the "chain" is broken. Generally, additional cardholders are not covered for the purchases they make. But, let's say, the primary cardholder makes the purchase (eg has a bill/invoice made out to him) but for whatever reason, the additional cardholder pays. Then S75 covers this - the borrower made the purchase.

As far as I know, there has been no ruling by a higher court on this. Some years ago there was some argument that additional cardholders should be covered because in making purchases they are "agents" of the primary cardholder. This was rejected (not sure by whom, I think the OFT were involved) because it is clear most cases they are not agents.

All we have is the FOS. People often focus on the "benefit" principle given in decision reference DRN4115539. I have seen this on MSE a number of times. But I think the key part of the decision is this:

I accepted that the link is satisfied if the purchase made on Mr S’s card also benefited Mrs S. I find that it did, because it was a present for their son which they told us they sat together on the sofa and chose the laptop, and wrapped up with a label from them both. So I found it was a combined purchase and a joint decision, chosen together and given to him together. So I found that the debtor, creditor and supplier requirement of section 75 was satisfied.

So essentially, although the additional cardholder presented the card, they made the purchase together. I cannot see that this would always be the case, merely because the primary cardholder gets a benefit from the transaction. In both of the other decisions linked to, there appeared to be some benefit to the primary cardholder, but the claims were rejected. I do not think the FOS findings are totally clear/consistent (and they are not binding anyway), but it seems to me that from the FOS's point of view, there has to be some element of involvment from the primary cardholder at the point of sale. And perhaps that's back to the agency reasoning - ie the additional cardholder was really making the purchase on behalf of both of them - so S75 is engaged.

Chrysalis

Interesting, so buying with credit is not enough but the buyer actually has to have some form of credit contract which an additional cardholder does not have.

chattychappy

Chrysalis wrote: »

Interesting, so buying with credit is not enough but the buyer actually has to have some form of credit contract which an additional cardholder does not have.

Yep. More specifically a credit agreement regulated by the Consumer Credit Act 1974. Other provisos apply too - individual item price must be at least £100.