Credit Cards

If you have a problem with goods or services and you used a credit card to pay for them, you may have some extra protection if the purchase meets certain criteria.

Extra protection

This extra level of protection is known as equal or joint liability.

For example, if you were sold faulty goods, you can claim against the supplier.

If you bought the goods by credit card you may have an equal claim against the credit card company. However, there are some conditions that have to be met for the credit card company to be equally liable. These are:

  • The cash price of the item supplied must be over £100 but not more than £30,000 - (e.g. if you used your credit card to spend £200 on car hire, you would be covered but if it were used to buy four concert tickets costing £30 each, the credit card company would not be equally liable because the individual item cost less than £100);
  • You used your credit to card to pay the deposit (as little as £1 but no more than £25,000);
  • There must have been a potential breach of contract i.e. the goods were not delivered, arrived faulty or were not as described; and
  • There must be a direct and intact relationship between you as debtor, the supplier of the goods or service, and the credit card company. In other words, the purchase is not processed or paid for via a third party.

Note: Being able to pursue the credit card company as well as the supplier is especially useful if the supplier has since gone out of business.

If you wish to claim against the credit card company, you should write to them, quoting Section 75 of the Consumer Credit Act 1974 as the relevant law. To download a sample claim letter see http://www.consumercouncil.org.uk/publications/credit-card-claim-letter-template/

Note: A credit card company would not be equally liable if you used your credit card to get cash, which you then used to pay for goods or services.

If the credit card company does not accept your claim, you should contact Consumerline on 0300 123 6262.

Equal liability is not just for credit card purchases. As long as the four equal liability conditions (mentioned previously) are met, there is equal liability where credit is obtained through a supplier for example, a finance company asked by a retailer to arrange a personal loan for a customer to pay for goods or services would be equally liable.

Outstanding finance

If you are buying goods using an HP agreement, you are not entitled to sell them until you have made the final payment. Up until that point, the goods are still owned by the finance company.

However, if goods that are still under an HP agreement are sold, the buyer cannot normally get what is known as ‘good title’ to the goods and the finance company can take them back.

Motor vehicles are an exception to this rule. Someone who buys a motor vehicle which is still under an HP agreement will get “good title” to the vehicle if they are not a dealer and acted as “an innocent purchaser for value”, in that they had no reason to suspect that the vehicle was under an HP agreement.

Early settlement

Debtors have the right to settle an agreement early, either in full or in part.

If you want to go for full or partial early settlement you should tell the lender what it is you intend to do. This notice can be given either orally or in writing.

If you are settling an agreement early for a fixed sum of credit, you will be entitled to a rebate. However, the rebate is often less than people expect. This is because the ways for working out early settlement rebates are designed to compensate credit providers for the costs of setting up and administering the agreement.

If you are settling early you are entitled to get information from the lender.

For full early settlement, the lender has to give you a statement showing how much you need to pay to settle the agreement early. For partial early settlement, the statement will give information about its effect on the agreement, e.g. changes to the amount of repayments or the length of the agreement.

There are further rules about how and when these statements should be given and you should not be charged for requesting them.

Right to information

During the lifetime of an agreement, if you send the credit provider a written request, along with a fee of £1, you’re entitled to receive a copy of your agreement and a statement of account.

Where the agreement is for a set amount, i.e. the amount borrowed and the interest rate are fixed, you should receive statements from the lender at least once a year and you are also entitled to ask for a statement of account at any time, which you do not have to pay for.