FOOL'S EYE VIEW
Plastic Protection

By Jane Mack (TMFJane)
April 3, 2003

The Consumer Credit Act is under review by the Government at the moment, as it hasn't been substantially altered since it came into being nearly 30 years ago.

It certainly needs to be updated after all this time but, surprisingly, people aren't always aware of the extensive protection it currently affords when you go shopping.

Consumers already have quite a lot of rights when it comes to buying faulty goods. For example, the Sale of Goods Act 1979 says that goods must be of 'satisfactory quality' and 'as described' to the customer, so you have a right to take them back if they're faulty. A supplier can also be sued if he persuades a customer to enter a contract by making a false statement of fact or by misrepresenting something.

The Consumer Credit Act is the all-important one, though. If your credit card is stolen, then your liability is limited to £50. Debt collection charges cannot be added to a debt unless specifically included in the contract. And we probably all know that you can cancel any credit agreement signed in the home during a cooling-off period.

However, one of the most important sections of the Consumer Credit Act is one not a lot of people know about -- and that's Section 75. It means that when you buy something using your credit card, your contract is with both the trader and the card issuer. They have equal liability for anything that goes wrong so you can take action against either of them to get compensation. The legislation is restricted to goods sold for more than £100 and less than £30,000, but it's tremendously useful in situations where, for example, the trader goes bust.

The CCA covers everyone with a credit card but you won't be surprised to know that card issuers don't exactly fall over themselves to let you know about this extra protection. In fact, you might even have to fight quite hard to enforce your rights with some companies but stick to your guns if you know you're in the right.

Interestingly, the legislation applies even if you only make a part-purchase (for example, by using your credit card to pay the deposit) and you are also covered for items bought from a UK supplier over the Internet. The Office of Fair Trading is of the view that transactions abroad are also covered by the Act although some card issuers disagree with this.

The current review of the CCA should clarify matters although recent changes implemented under a European directive now provide some form of alternative protection if a card issuer disputes their liability.

At any rate, take note of the following tips:

• Always keep copies of your credit card statements in case you need proof of the amount you paid.
• If you need to make a claim, go back to the supplier first.
• If you get no joy from the trader, contact the card issuer in writing and don't be deterred if you initially get a negative response.

Be aware that debit and charge cards aren't covered by the legislation so, when you buy something for more than £100, make sure you use your credit card to do it. The extra protection makes it worth it.

More: Credit Card Centre