Section 75 question

calog

I think I have learnt a lesson today regarding section 75.
I paid a deposit with my credit card towards an item worth £35k. I wrongly thought I could claim the £30k covered by section 75 but it was brought to my attention by the credit card company that as the total cost of the item was over the £30k limit section 75 didn't apply.
My question is - how can you cover yourself in such an event? Is there any other way to get protection for over £30k.
thanks.

born_again

Your only option is

Section 75a covers things costing over £30,000, up to £60,260. But for a purchase to be covered, the finance must be properly linked to an item (known as a debtor-creditor-supplier agreement), so that the finance firm can see a clear relationship between the money and goods.

So dedicated finance via retailer.

Mark_d

calog said:

I think I have learnt a lesson today regarding section 75.
I paid a deposit with my credit card towards an item worth £35k. I wrongly thought I could claim the £30k covered by section 75 but it was brought to my attention by the credit card company that as the total cost of the item was over the £30k limit section 75 didn't apply.
My question is - how can you cover yourself in such an event? Is there any other way to get protection for over £30k.
thanks.

Rather than trying to pursue via credit card/linked credit agreement, you always have the option to raise a legal claim against the retailer directly.

DullGreyGuy

calog said:

My question is - how can you cover yourself in such an event? Is there any other way to get protection for over £30k.

As Born_Again says S75a is your friend here but it only applies where the retailer arranges the finance for you (think a PCP deal on a car). Obviously this requires you to buy from a merchant that offers finance, you getting accepted for that finance and it cannot be the merchant themselves providing the credit. 

paganmanwales

Given the OPs experience,  does anyone else think that it is time that the £30,000 ceiling on section 75 was raised? If the figure had kept pace with inflation, it would now be £270,000!

eskbanker

paganmanwales said:

Given the OPs experience,  does anyone else think that it is time that the £30,000 ceiling on section 75 was raised? If the figure had kept pace with inflation, it would now be £270,000!

I'd have thought that any changes to the Consumer Credit Act would likely be detrimental to consumers, as it was never intended to provide widespread protection for run of the mill transactions on credit cards, but was instead aimed at one-off credit agreements for major purchases.  Granted, a higher limit would probably have helped OP in their particular scenario, but my expectation is that s75 is more likely to be reformed in a more fundamental way than simply being adjusted for inflation, and that this won't be to most consumers' advantage....

SiliconChip

Does S75A work in the same way as S75? i.e. if you have suitably arranged credit for any part of the amount, regardless of how the rest is paid, is the whole amount covered? Or does the credit need to be for the full amount?

Grumpy_chap

paganmanwales said:

Given the OPs experience,  does anyone else think that it is time that the £30,000 ceiling on section 75 was raised? If the figure had kept pace with inflation, it would now be £270,000!

I agree it is time that the S75 rules were updated.  I am minded in a similar manner to @eskbanker.
The current S75 rules and the way they apply to credit cards is absurd and cannot possibly be what was envisaged or intended when the rules were defined.

A CC has virtually zero influence as to how a supplier provides a service or ensures the quality of goods, yet carries equal liability under consumer legislation for the outcomes.
The CC does not even have a vetting process for which companies they wish to work with and assume that shared liability.
A consumer can by a £20k used car from a fly-by-night rogue trader and paid the deposit, say £100, by CC.
The CC gets a business income (revenue) of, say 2% so £2 from that £100 transaction.  From this £2, the CC has to meet all their operating costs, card-holder incentives, overhead and profit.
Then there is an issue with the car that gives the consumer right to reject for full refund, but the trader has closed up shop and fled into the night.
The consumer therefore claims on the CC under S75 and after some investigation, the CC is on the hook to reimburse the full £20k that the consumer paid.
This really does seem rather absurd and, ultimately, unsustainable.

Rather than increasing the liability on the CC to £270k it seems far fairer that the liability on the CC is massively reduced or, even, removed altogether.

eskbanker said:

s75 is more likely to be reformed in a more fundamental way than simply being adjusted for inflation, and that this won't be to most consumers' advantage....

Arguably.
It may be to most consumer's advantage if the operating cost level of the CC business is reduced and competition forces that reduction in cost basis to be passed on to consumers (even if via retailers).  Reductions in the processing fee (eventually passed to consumers in ticket prices), reductions in interest rates, annual fees or enhanced incentives would all be to the benefit of most consumers.
Most transactions, most consumers, most of the time are not pursuing S75 claims.

born_again

paganmanwales said:

Given the OPs experience,  does anyone else think that it is time that the £30,000 ceiling on section 75 was raised? If the figure had kept pace with inflation, it would now be £270,000!

The whole S75 regulation needs reviewing as it was never intended to cover credit cards.
As per @eskbanker
Any updating is bound to take away many of the S75 rights that are there now. 

Updating  the amount will not make much difference. The % of S75 claims are pretty low (but a large cost) compared to the whole chargeback scheme.

DullGreyGuy

SiliconChip said:

Does S75A work in the same way as S75? i.e. if you have suitably arranged credit for any part of the amount, regardless of how the rest is paid, is the whole amount covered? Or does the credit need to be for the full amount?

There are differences, for example you must have attempted to resolve the matter with the supplier first before going to the credit provider. 

It is like S75 that it only defines what the cash value of the item/service has to be and doesn't stipulate how much the credit had to be so will cover a PCP where you PX your old car for example. 

ArbitraryRandom

calog said:

I think I have learnt a lesson today regarding section 75.
I paid a deposit with my credit card towards an item worth £35k. I wrongly thought I could claim the £30k covered by section 75 but it was brought to my attention by the credit card company that as the total cost of the item was over the £30k limit section 75 didn't apply.
My question is - how can you cover yourself in such an event? Is there any other way to get protection for over £30k.
thanks.

The best advice has already been given - S75 makes your card provider jointly liable, so while it's easier than a civil suit, your alternative is a letter before action to the seller and court (doing your due diligence that the time/cost is balanced by your chance of success and enforcement). 

Depending on the purchase, the only other avenue I think you could attempt would be splitting the cost across more than one purchase - for example, if the payment is for building work, as for separate invoices for phases of the work (not scheduled payments, treating them as different jobs) or for materials vs labour; if it's for a home theater system, then perhaps the system and the install could be broken down to separate transactions. Obviously if it's £35k on a single piece of jewellery with free delivery that's not going to work