purchase protection and large purchase query

constantsmiler

Hi guys, I run a small car business and a customer needs parts to the tune of around 8k to restore a vehicle. It’s a massive amount for me to pay so I’ve asked the customer to pay me before I pay the company, and as they know me they are more than happy to. The customer could pay for parts directly but if I pay for parts, then I get good future discount which is my main reason for purchasing myself.

To protect me, and the customer financially- I’d like to apply for a credit card solely for this large transaction, as the parts have to be custom made and can take 12 weeks for manufacture.

Is there any good cards people in the know would recommend. I’ve seen cash back cards, and the like and if I can make a few quid out of the transaction happy days.

My plan was to get customer to pay me, then I pay the parts company with the card, then transfer funds from my account to pay the 8k on credit card immediately.

Then I have no interest to pay, but still avail of the purchase protection.

All help greatly appreciated. Ps the card would be in my name, not the company as the bank has told me I don’t have sufficient turnover to apply for a card.

Many thanks guys

PRAISETHESUN

If you are solely after section 75 protection, then as long as part of the payment (eg. a deposit, or even technically as low as £0.01) is paid by credit card then the entire balance is protected, even if you choose to pay for the rest via another method. The only caveat is that each individual item needs to be over £100, but it sounds like this won't be an issue.

In terms of which card is the best to use, probably a cashback/reward card of some description would be best since you will get some rewards effectively for free once the customer reimburses you for the cost of the parts ordered. See below: https://www.moneysavingexpert.com/credit-cards/cashback-credit-cards/

LuSiVe

Section 75 is only for consumer transactions not business, even if a personal credit card is used.

Craig1981

would you not get the ongoing discounts from the supplier if you recommend the customer to them directly? is the supplier a well know one? there should be no issues if they are

LuSiVe is correct - section 75 protection will not cover you as it is a business purchase

eskbanker

LuSiVe wrote: »

Section 75 is only for consumer transactions not business, even if a personal credit card is used.

Craig1981 wrote: »

LuSiVe is correct - section 75 protection will not cover you as it is a business purchase

This comes up regularly on here, does anyone have anything definitive to endorse this claim?

Obviously the legislation is the Consumer Credit Act but as pointed out on other threads, the Act doesn't explicitly exclude business purchases, if made on a personal card and invoiced to the cardholder:

chattychappy wrote: »

eco_warrior wrote: »

As long as the invoice is in your name and not your company/business name

Agreed. It is often claimed that buying something for business use defeats a S75 claim, but the Act doesn't make any distinction*. If the main cardholder made the purchase (ie is on the invoice) then S75 applies.

(*distinction according to transaction. The CC itself must be taken out under the CCA1974. So a company credit card wouldn't be covered.)

Terry_Towelling

Looks like the CCA coverage angle is a moot point but, presumably, its silence on business-transaction coverage is down to the fact that the act (by its very title) is clearly aimed at covering 'consumers' and not businesses so it doesn't need to be specified within its content. That said, there is still Chargeback protection for certain issues.

On top of all that, how does the end customer intend to pay your bill - credit card/cash etc? You could end up with some complex issues to deal with if the customer rejects parts and wants a refund and you are not able to get same from the supplier. If the payment method to you is credit card, you too could be open to Chargeback or get dragged into a CCA claim.

Take care.

eskbanker

Terry_Towelling wrote: »

Looks like the CCA coverage angle is a moot point but, presumably, its silence on business-transaction coverage is down to the fact that the act (by its very title) is clearly aimed at covering 'consumers' and not businesses so it doesn't need to be specified within its content.

There's obviously no dispute about the title of the Act, but in the scenario being discussed, a consumer would be receiving credit, that consumer would be making a purchase with their personal credit card and the name of that consumer would be on the receipt. What subsequently happens to the purchased goods wouldn't appear to be relevant....

Happy to be corrected if there is a genuine legal reason why that transaction wouldn't qualify for s75 coverage but IMHO the wording of the title of the act itself really doesn't cut it as a definitive explanation!

antrobus

Consumer Credit Act 1974
1974 CHAPTER 39
An Act to establish for the protection of consumers a new system, administered by the Director General of Fair Trading, of licensing and other control of traders concerned with the provision of credit, or the supply of goods on hire or hire-purchase, and their transactions, in place of the present enactments regulating moneylenders, pawnbrokers and hire-purchase traders and their transactions; and for related matters.

https://www.legislation.gov.uk/ukpga/1974/39/introduction

Thus;

Section 75 only applies to purchases made with credit in the capacity of a consumer. It does not therefore apply to Business credit cards and users of these products should not expect Section 75 protection. Theoretically, purchases made with a consumer credit card for business purposes would not be covered either.
http://uk.creditcards.com/guides/guide-to-section-75.php

I believe that the "theoretically" bit applies, because a CC company or indeed a retailer would not necessarily know or suspect that a particular purchase was for business purposes.

However I'd guess that the OP's supplier does know that they are a business, and thus any hypothetical s75 claim would fail.

chattychappy

antrobus wrote: »

Consumer Credit Act 1974
1974 CHAPTER 39
An Act to establish for the protection of consumers a new system, administered by the Director General of Fair Trading, of licensing and other control of traders concerned with the provision of credit, or the supply of goods on hire or hire-purchase, and their transactions, in place of the present enactments regulating moneylenders, pawnbrokers and hire-purchase traders and their transactions; and for related matters.

https://www.legislation.gov.uk/ukpga/1974/39/introduction

Thus;

Section 75 only applies to purchases made with credit in the capacity of a consumer. It does not therefore apply to Business credit cards and users of these products should not expect Section 75 protection. Theoretically, purchases made with a consumer credit card for business purposes would not be covered either.
http://uk.creditcards.com/guides/guide-to-section-75.php


I believe that the "theoretically" bit applies, because a CC company or indeed a retailer would not necessarily know or suspect that a particular purchase was for business purposes.

However I'd guess that the OP's supplier does know that they are a business, and thus any hypothetical s75 claim would fail.

Sorry, I think that's all nonsense. Titles of acts (long or short) only have limited use of for interpretation. That is particularly the case where Acts have their own interpretation clauses.

For a great example, look at the Deregulation Act 2015
An Act to make provision for the reduction of burdens resulting from legislation for businesses or other organisations or for individuals; make provision for the repeal of legislation which no longer has practical use; make provision about the exercise of regulatory functions; and for connected purposes.

In fact, there are all sorts of new regs brought in by this Act!!

On the CCA, the key point is that it governs "agreements". If the "agreement" is one governed by the Act then so are the transactions under that Act (whatever the nature of the transaction). The Act doesn't apply to individual transactions on a case-by-case basis. The agreement you sign should say whether it's been formed under the Act.

S75 has it's own provisos (item price etc) - but doesn't refer to the nature of the transaction.

The only issue I can think of is if the agreement itself says you mustn't enter into business transactions. If despite this you go ahead, perhaps the bank could argue the transaction is outside of the agreement, but I don't think so. Perhaps they could have a counterclaim in the event of your making a S75 claim - again I don't think so.

In the case of the OP, the key thing is to make sure that he is on the invoice. If he has a Ltd company and this is the true purchaser (ie is on the bill) then S75 wouldn't kick in for the reason that the purchaser is not the cardholder.

eskbanker

antrobus wrote: »

Theoretically, purchases made with a consumer credit card for business purposes would not be covered either.
http://uk.creditcards.com/guides/guide-to-section-75.php

But on what basis are they theorising? That statement doesn't seem to be supported by anything actually in the Act so it's genuinely not clear to me exactly how they reach that conclusion.

In terms of credibility, it's perhaps worth noting that "uk.creditcards.com is a trading name of Freedom Marketing Ltd" rather than being an organisation who could be said to have a definitive position - I'd happily be persuaded by something substantive from FCA, FOS, other government agencies, court cases, etc....

constantsmiler

Thanks guys for all the responses, much appreciated