Section 75 – the law that credit card users need to know about

If you are a consumer who uses a credit card then if there is one piece of legislation you need to be familiar with it has to be Section 75 of the Consumer Credit Act.

Basically this Act provides protection and recourse to a consumer by recognising that the credit provider is of equal liability with the provider of goods and services when fraud, breach of contract or misrepresentation occurs.

This Act does not, however, entitle the consumer to a refund on just any purchase made with credit – for the Act to apply these conditions must be satisfied:

• The cash price of the goods or services bought by the consumer must be at least £100 and no 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.

The Act was amended in 2006 and will be fully amended by October 2008.

From 1 October 2008, lenders will be required to provide borrowers with much more information about their accounts, such as an annual statement and regular notices when consumers fall into arrears or incur a default sum, and debt administration service providers and credit information (repair) service providers will need a consumer credit licence as these services will be regulated by the OFT.

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