Your rights where you purchased goods using a credit card
Not many people know about this and it is really useful.
If there’s something wrong with your goods and you bought them on credit, you may be able to claim compensation from the credit lender, rather than the trader who sold you the goods.
This can be especially useful where the trader has gone out of business or has no money to compensate you.
There are two possible routes you may be able to use to claim compensation from the credit lender:
- Section 75 of the Consumer Credit Act 1974 gives you the right to make an equal liability claim to the credit lender where the goods cost more than £100
- use a chargeback scheme, operated by some credit lenders. Lenders operate these schemes on a voluntary basis so you don’t have an automatic right to use one.
EQUAL LIABILITY CLAIMS
If goods cost more than £100 but less than £30,000
If the goods cost more than £100 but less than £30,000, you can make an equal liability claim to:
- a credit card company if you bought the goods with a credit card
- another type of credit lender, such as a loan company, as long as the credit was arranged by the trader who sold you the goods. If you paid for the goods using a loan from a company which you found yourself, you won’t be able to make an equal liability claim against the loan company.
You can’t make an equal liability claim if you bought your goods on hire purchase or conditional sale.
If you’re making an equal liability claim for goods costing less than £30,000, you can make a claim against the credit lender instead of the trader or claim against both jointly. You don’t need to try and make a claim against the trader first.
For goods bought on credit after 1 February 2011, you may be able to make an equal liability claim against the credit lender even if they cost more than £30,000.
You can’t make an equal liability claim if the goods cost more than £30,000 and you bought them before this date.
There are a number of conditions you have to meet. Some of these are different from the conditions which apply to claims for goods of less than £30,000.
Before you make a claim to the credit lender, you must have tried to make a claim to the trader who sold you the goods first.
You can only approach the credit lender once you have tried to approach the trader and:
- they have refused to compensate you, or are unable to
- you have been unable to contact the trader
- the trader has gone out of business.
The following conditions must also apply:
- the credit agreement is for less than £60,260
- you didn’t use a credit card to buy the goods
- you used the credit to buy something specific, like a car or a new kitchen. It must say on the loan agreement what you are using the loan to buy
- you haven’t already accepted a replacement or some other form of compensation from the trader
- you didn’t take out the loan for business reasons
- the credit was arranged by the trader, and not with a loan from a company you found yourself
- the loan wasn’t a hire purchase agreement or conditional sale.
Even if you can’t make an equal liability claim, you may be able to use a chargeback scheme run by your bank or a debit card company such as Visa.
You might want to use chargeback if you’ve used a debit card rather than a credit card, or if you used a credit card but the goods cost less than £100.
You don’t have an automatic right to use a chargeback scheme. You will need to contact your bank or card provider to see if you can make a claim. There is usually a time limit for doing this.
You may find it useful to ask for a chargeback if:
- you have paid for goods that have not arrived or have arrived damaged
- the goods that you receive don't match their description.
IMPORTANT NOTE: As a safeguard, ALWAYS buy goods using a credit card.
Case Summary Facts
Mr Hardcastle purchased a laptop computer from a small computer shop using his credit card. When he got the laptop home it did not work. Mr Hardcastle took the laptop back to the shop the next day but the shop owner refused to give him a refund stating that the computer worked when it left the shop.
The Legal Position
Under the Sale of Goods Act 1984 Mr Hardcastle is entitled to a full refund as the laptop does not work.
If the shop refuses to provide a refund or if they go out of business before resolving the issue then Mr Hardcastle can make an "Equal Liability Claim" to his credit card company given the fact that he paid using his card.
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