Consumer Credit Act

Now that you have your credit card terminals in place and you’re free to accept credit cards, you will be attracting more business through your door from people who insist on using their credit card because they know their rights under Section 75. It’s important to know the loopholes and exceptions when it comes to dealing with Section 75 claims. The following 4 points provide scenarios in which the legal protection of the customer under Section 75 becomes invalid…

• Third party purchases are where credit card payments go to an organisation that is not supplying the goods or service. You’re unlikely to make a successful claim when a credit card   is used for payments to a third party company because the credit card company ( bank ) must have a direct relationship with the supplier of the goods or service for them to be equally liable. However, when booking a flight through a travel agent, customers are likely to make a successful claim should the chosen airline go into liquidation before the service is provided.

• Third party purchases are where credit card payments go to an organisation that is not supplying the goods or service. You’re unlikely to make a successful claim when a credit card   is used for payments to a third party company because the credit card company ( bank ) must have a direct relationship with the supplier of the goods or service for them to be equally liable. However, when booking a flight through a travel agent, customers are likely to make a successful claim should the chosen airline go into liquidation before the service is provided.

• There are such instances when a claim will be made for a goods or services that does not directly benefit the primary card holder. These claims would not be successful. Any card that is set up by person A for the use of person B, like a child or friend, which is used in payment of an item not intended for person A will not be protected by Section 75.

• Credit card payments for land are regulated by the Financial Services Authority. Therefore, this indirect relationship will also sever any ties with Section 75 law.

• And finally, credit card cheques or payments made with cash withdrawals will also fall short of any protection under this legislation.

Other than these, the customer is likely to make a successful claim – though of course each claim will vary from the next – so ensure you’re clued up on the card holder’s rights when you begin card processing.

It’s also important to remember that the holder can pay only a fraction of the total amount for any one good or service on their credit card, perhaps in the form of a deposit, in order to gain legal protection in a transaction that goes wrong. And credit card payments for goods overseas are protected as well!

Clearly, with these rights in place, customers are far more willing to invest the time in applying for their own cards, so should you not accept credit cards yourself a major opportunity will be lost. Seymour Direct can arrange these credit card services for you, among a range of other cost-saving strategies, in recognition of the increasing importance of credit card machines for small business.

Stef Lenza

17th January 2012