Timeshare Consumer Guide: Claims Under the 1974 Consumer Credit Act 82

For consumers who paid by credit card or dedicated loan and feel they have been missold or believe the product has not delivered as sold.

When you pay for goods and services using a credit card or specific loan agreement you are entitled to consumer protection under the Consumer Credit Act of 1974 (often referred to as CCA74).  Under Section 75 of this Act customers who have a claim against a supplier for breach of contract or misrepresentation will generally have an equal claim against the credit-providing company.

Section 75 states that the lender of money for a purchase is jointly responsible with the seller that the purchaser should receive the goods or service purchased. What this means is that if you paid using a UK issued personal credit card (but not a debit or charge card - see “debit cards” below), or borrowed money under a loan agreement arranged by the trader and regulated by the 1974 Consumer Credit Act, then in the event of misrepresentation or a breach of the contract you entered into (i.e. failure to deliver on the contract) you can claim ALL the money you paid (irrespective of how you paid it) back from the card company or lender.  You can rely on section 75 of the CCA to claim against the Credit Card Company or lender even if you have fully repaid the money to them. 

A claim can be made on the grounds of either (or both):- 

Misrepresentation - that you were given false or misleading information to entice you to sign and you would not have signed if you had known the truth. The misrepresentation needs to be of "substance”.

Breach of contract - in that a term in the contract with the supplier has not been complied with and you have suffered financial loss as a result.  

There are, however, certain conditions that must be met for the Act to apply: 

The claim is not limited to the amount of the credit card/loan transaction. Customers can claim for all losses caused by the breach of contract or misrepresentation, even if they only paid the deposit by credit card.  For example, if a customer paid a deposit for goods using a credit card and subsequently paid the remaining balance using a different credit card, a cheque, a bank transfer or separate loan agreement, the consumer may claim for the WHOLE cost of goods (and any consequential losses) against either credit card or the loan company except, of course, the customer cannot seek to recover the same money twice.

There are, however, certain conditions that must be met for the Act to apply:  

The price of the goods or services must be more than £100.

Purchases are not covered if they are made by debit cards or by charge cards (where the monthly bill has to be settled in full)

Section 75 only applies if the credit has been provided under a ‘pre-existing arrangement’ that involves both the supplier and the credit provider - so credit cards are covered.

Credit card cheques are not covered because they can be made payable to anyone – not just to the suppliers appointed to accept the credit card. Also the credit card company would not share liability if the card was used to withdraw cash to pay for the purchase.

If you do not have a valid claim against the organisation with whom you contracted, you will not be able to claim against the credit provider.

There can also be problems if the card payment is taken by a different business from the one that provided the goods and services because the third party rule will again apply. This situation is most frequently seen in connection with timeshare and holiday club membership, where it is not unusual for the timeshare or holiday club company to use the credit card facilities of another business. The business accepting the payment may simply be acting as agent for the supplier, in which case section 75 will not apply. In order for section 75 to apply the business that accepts the payment and the supplier have to be
‘associates’, as defined within the Consumer Credit Act.

Many people now use their credit cards to pay for goods and services while on holiday abroad. In an appeal to the House of Lords (October 2007) a ruling has now been made that section 75 also applies to transactions made abroad.  

Consumers have six years from the date they first become aware of a potential claim, to bring a claim against their credit provider.  The rules which determine the actual date from which this time limit starts are complex and you should seek legal advice as soon as you become aware of the problem if this limitation is likely to affect your situation in any way.

It is not a requirement of CCA 74 that the consumer must first take legal action against the supplier.  

There is no automatic entitlement to a refund under Section 75 where, for example, the customer has simply changed their mind.

Many credit providers routinely reject the first attempt at a claim. You will need to be persistent and resilient, and it may take up to four letters to them (or a referral to the Financial Ombudsman) before you get a satisfactory reply.  If all reasonable approaches fail you should advise the credit provider that you will take your claim to the Financial Ombudsman if they continue to reject your claim under CCA74.  If this does not work you can take your claim to the Financial Ombudsman, telling them the reason the credit company gave for their rejection.  You should ask your credit provider for a letter of deadlock and if they refuse to provide this write to the Financial Ombudsman complaining about the conduct of the lender.  The Financial Ombudsman service is consumer-friendly and easy to use, and you should not be concerned about contacting them personally. They can provide you with a leaflet explaining how they work and their website (see below) is very helpful. 

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