Credit cards liable for faulty goods

Consumers who are sold faulty goods have reason to celebrate thanks to rulings, published by the Financial Ombudsman Service (FOS), confirming that where retailers refuse to refund or replace, shoppers paying by credit card can claim from their lenders instead.

The protection is offered by Section 75 of the Consumer Credit Act, which states that the card provider jointly and severally liable for any purchase made using its products.


If the goods or services paid for using the plastic are not up to a satisfactory standard, cardholders can therefore apply to their card providers for a refund should the retailer concerned go bust or refuse to honour their claims.

Historically, the Sale of Goods Act has given consumers the right to pursue a retailer for a refund, repair or replacement if a product turns out to be faulty. In theory, this right runs for up to six years based on the type of product, the price paid and a reasonable assessment of how long it should last.

However, high street stores are renowned for ignoring this law by restricting any guarantee to one year or telling dissatisfied customers to take their complaints to the manufacturer. In these circumstances, shoppers have little choice but to pursue a claim in the county court.

Now, though, the FOS is hoping to show shoppers that there is another, potentially much easier way to win the redress they deserve by publishing a number of rulings in which it has upheld consumers' complaints and forced card companies to honour Section 75.

One of these cases involves a young college student - called Miss T by the FOS - who bought a laptop for her studies using a credit card. The laptop developed a serious fault after just six weeks, but the store where she bought it refused to do anything. Subsequent inspections revealed a faulty motherboard that would have cost more to replace than the value of the laptop itself.

After completing her exams, the student therefore contacted her credit card company, explained the problem and asked for a refund. However, the card provider turned her away saying it was "not responsible for the quality of goods bought with a credit card".

Consequently, the student took her complaint to the FOS, which ruled in her favour with a decision that will give hope to other shoppers who face the same shoddy treatment from stores.
It said: "On the basis of the evidence supplied by Miss T, we said that the laptop was not fit for purpose, as it should not have developed a fault of this nature so soon after Miss T had bought it."

Despite the retailer being at fault, the FOS ruled that the card provider was jointly liable with the supplier for any breach of contract and ordered the unnamed bank involved to pay a full refund plus £100 for failing to handle the claim correctly.

Not all shoppers can use Section 75 to claim a refund, though. Claims using the protection afforded by Section 75 must involve goods or services that cost between £100 and £30,000, purchases worth below or above these limits are not covered by the law.
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