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Consumer Credit Act 1974

(A non-legal guide)



Brief summary of the Consumer Credit Act 1974   -  CCA74



1.	You can make a claim under CCA74  if you purchased a product or service, anywhere in the world,  costing more than £100 and less than £30,000 provided that:-

    


  •  you paid any amount  by a UK issued  credit card
    •   

  • OR you signed a loan agreement with a UK based  lender at the same time as signing the purchase agreement (“linked” loan)

    •  

  • AND  you can demonstrate either breach of contract   or   misrepresentation (It is much easier for a group to demonstrate misrepresentation than for an individual)
    • 






2.	If you paid by credit card you are entitled to claim for ALL the money paid for the purchase (up to the £30,000 limit) irrespective of how it was paid (credit card; debit card; cash; cheque: BACS etc.).  You can also claim 'reasonable' damages. See also an   update 



3.  If you took out a linked loan  your claim can be for:-

  • The return of all the money paid to the lender
    • 

  • Cancellation of the loan agreement.
    • 


4.	You can make a claim even if you have fully repaid the money to the card company or the lender.


















Section 75 of the Consumer Credit Act 1974 states that the lender of money
for a purchase is jointly responsible with the seller for the purchaser
getting the goods or service purchased, or receiving a FULL refund of ALL money paid  if they
do not receive the goods or service. 


What this means in practice is that if you paid  by a UK issued personal credit card (but not
charge card), or borrowed money under a loan agreement regulated  by the CCA74 and arranged by the trader,    then you can claim back ALL the money you paid from the card company or lender if you do not get what you bought  (irrespective of how you paid it),  provided that the maximum contract value does not exceed £30,000.  You may also be able to claim if you used a debit card which resulted in your bank account becoming overdrawn. 



A claim can be made under either (or both):-


To succeed in a claim you need to be able to prove, preferably from written
evidence:-

1. What you bought or were promised. The purchase agreement
is the most common form of evidence but you may have to rely on what you
were told verbally prior to signing the purchase agreement.

2. That you paid by a credit card (or borrowed to finance).
A copy of the payment slip or credit agreement is usually sufficient. You
will also have to supply evidence of any other payments that were made.
(bank statements etc.)

3. That you did not - or cannot - get what you bought or were promised.
Evidence of this can be in a number of forms:

i. formal evidence that the company that was to provide the
goods/service is no longer trading

ii. a written statement that the goods/service will not be delivered

iii. non delivery of the paperwork to enable to you to obtain the goods
or services (i.e.. not receiving a cash back certificate which is necessary
to register your claim)

iv. records of unsuccessful attempts to obtain the services. (diary
or similar)



A claim will only succeed if it is made against the company that took the
money - which must also be the company with whom you contracted, not against any other company that may be involved in the purchase.

A claim is made in the form of a letter to the card company - there
is no special format (but see later) nor any charge.


Additionally, Sections 140A and 140B (recently added by the Consumer Credit Act 2006) enables a court to also consider the conduct of the lender (or the agent of the lender) if it has been "unfair". What may be considered unfair would be breaches of other consumer laws such as the CPR's   and aggressive sales practices etc. 


However there are a number of restrictions when making a claim under
the CCA74:


  
1. Following a series of court hearings, culminating in an
    appeal to the House of Lords (2 - 3 October 2007),  it was confirmed
    that the use of a UK issued credit card overseas is covered by the CCA74
  
  

  
2. Whilst the law of limitations says that a claim in the courts cannot be made after a
    period of 6 years,  a claim  directly against a bank can be made at any time. 
    

    
 
3. If you have passed the 6 year limit then it is still possible to make a court claim if you can show that you only became aware of (or reasonably ought to have become aware of) the misrepresentation or breach of contract within the last 3 years.    
    
    
    
  
4. If the organisation with whom you contracted say in the purchase
    agreement that they do not have responsibility for delivery of the goods or services
    then the claim will be rejected as the card company have no liability for
    third parties failing to deliver.
    

  
5. Likewise, if the card payment was made to a different company than
    the one you contracted with, then third party argument would also apply and your claim would fail, even though  this may be fraudulent.
    
 However, if you can show that the two companies are under "common control" then a claim should be accepted. 


If you used a credit card and borrowed money (or used two credit cards)
you could claim the full amount from either or both - but only to a total
of the total originally paid. But it is good practice to make a claim against
the supplier before claiming from a lender. 




Be prepared for the card company to resist paying. Most will automatically
reject your first attempt - and even the second attempt - but you should
persist with the claim and let us know if you receive a final rejection,
and the reason given for that rejection.  Our advice is to threaten
to take your claim to the  Financial Ombudsman  Service  - who are a consumer friendly organisation - should you receive two letters
of rejection. If this does not work, it is  ALWAYS  worth taking  your claim to
the Financial Ombudsman. Whilst this will not cost you anything, it will  cost the card company £450 - which often encourages  them to revise their view !

Your claim letter will have the following paragraphs:-


Obviously, all your statements must be true.


If the lender gives you a final refusal then you can take the matter to Financial
Ombudsman (there is no charge to you,  although the lender has to pay £450) - the lender is obliged to tell you how
to do this. If the Financial Ombudsman decides against you there is still
the option of taking the lender to court, although a court is likely
to follow the Financial Ombudsman ruling. 

If the lender refuses to give you a letter of deadlock, then write to
the Financial Ombudsman (South Quay Plaza, 183 Marsh Wall, LONDON, E14
9SR) complaining about the conduct of the lender and asking the Financial
Ombudsman to send you the leaflet explaining how they work.


Update



The Consumer Credit regulations (as from 1 February 2011) extend the protection of the Consumer Credit Act 1974 in a number of ways.
  The key changes for timeshare purchasers are:-






  TCA advice

Many card companies  automatically reject the first attempt at a claim - some routinely reject  all claims 

So you may need to be  really persistent  (including  taking your claim to the  Financial Ombudsman) before you
get a satisfactory reply.





Form Letters

To help you make your claim:-