Consumer Credit Claims

An overview of Sections 75 and 140 of the Consumer Credit Act

In a society where cash transactions are declining, many individuals value the convenience and financial flexibility offered by credit cards and loans. However, it is important to understand the legal protections associated with these financial products. These legal provisions ensure that lenders and merchants uphold fair treatment of consumers.

Section 75, your credit card can protect your

Section 75 of the Consumer Credit Act 1974 provides legal protection for credit card users when purchasing goods or services. Under specific conditions, credit card providers share responsibility with the seller. To simplify, if a consumer uses their credit card and the seller breaches the contract or provides false information, the credit card company offers legal protection, including the ability to claim a refund.

Section 75 applies to purchases between £100 and £30,000, ensuring coverage for items within this price range. Even if only a portion of the cost is paid with a credit card, the entire amount can still be reclaimed. Exceptions to Section 75 include cash withdrawals, foreign transactions, and certain third-party payment processor transactions. However, most credit card purchases directly from merchants are covered by this provision.

Section 140 - An unfair credit relationship

Section 140 of the Consumer Credit Act 2006 provides a legal recourse when a consumer credit agreement creates an "unfair relationship" between the lender and borrower. This provision allows the court to intervene upon deception by the lender, granting the borrower the opportunity to seek a review of their credit agreement. If an unfair relationship is proven, the court has the authority to modify the terms, refund payments, or cancel the credit agreement. Unfair relationships may manifest as exorbitant interest rates, undisclosed fees, misleading information, or aggressive collection practices.

How to make use of this provision

To access the protection provided by Section 75, it is necessary to contact your credit card provider with the relevant documentation and dispute details. This typically includes receipts, invoices, contracts, or any correspondence with the seller. It is essential to be aware that there may be time limits for making a claim, usually within six years of the original purchase date (or five years from when the purchaser first became aware of the problem in Scotland).

For making a Section 140 claim, it is advisable to seek advice from a legal professional or a debt advice service to assess the merit of your case. If your claim is deemed valid, you will need to apply to the court for a review of your credit agreement. Pursuing legal action can incur costs such as court fees and charges for legal representation. Alternatively, you may also consider presenting your case to the Financial Ombudsman Service, which offers free assistance. You might be eligible for fee exemptions or reductions in court actions depending on your financial circumstances. This can apply if you have a low income or receive certain benefits.

To summarise

Having a clear understanding of the protections provided by Section 75 and Section 140 is crucial for UK consumers who utilise credit cards or loans. By staying informed about your rights and knowing the necessary steps to take when filing a claim, you can ensure fair treatment and have a plan of action in case of any unfavourable issues related to your credit card or loan. Always remember that these protective measures are in place to safeguard both you and your finances. If you believe you have a valid claim, do not hesitate to seek advice, or take appropriate action, as the law is designed to assist in such circumstances.

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