Protecting Your Customer.
In positioning yourself as an expert, whether representing your own business or someone else’s, it’s important to have a basic understanding of how your customer is protected.
The subject doesn’t need to be brought up but often your customer will state a misguided belief about protection and as an ethical seller, it is your duty to make sure they understand.
The guidance in these pages is not intended to replace legal advice.
How does using a credit card or finance protect the customer’s deposit?
When your customer pays a deposit with a credit card, they may be covered by section 75 protection which means that the credit provider is jointly liable with the supplier for ensuring that the customer receives what they paid for. It’s not an easy claim to make or win but in theory, it offers peace of mind for your customer. Paying the deposit with cash or a debit card offers no protection at all.
Is it true that the finance company provides double protection when your customer finances their purchase with a credit facility?
You may be told, and I have, in good faith, told customers this, because that is what I was told.
‘Financing your product provides double protection for your guarantee for the life of the guarantee given by the company’.
Since researching facts for this website, I can find no evidence at all to back this up. I have read several finance agreements and have spoken to three finance providers and as far as I can see the only way that ‘double’ protection is provided is through a Section 75 claim, so to say that it provides ‘double indemnity’ is slightly misleading.
Third Party Credit Facilities.
Be careful about telling customers about extra protection if your finance or credit card company processes payments through a 3rd party. This will invalidate a section 75 claim.
Deposit Protection for businesses.
You may benefit from belonging to a deposit protection scheme such as HIP.
They protect up to 25% deposit.
Don’t forget that you saved these items.
- There are no saved items yet.
Protection relates more to misrepresentation or failing to supply than in it does to goods that develop a fault, unless they were not fit for purpose in the first place. Claims must be made within six years (5 years in Scotland) which is often less time than the guarantee so does not amount to ‘double indemnity.’
As previously stated, this is not legal advice so ask the question of your finance representative.
WHAT IS SECTION 75?
Section 75 provides protection for your customer when they use credit in the form of a finance agreement or credit card for purchases between £100 and £30,000. The law states that the credit provider is jointly liable for their purchase. It was put in place to protect buyers from paying debt for a purchase that they do not see the benefit of, because it is not as it should be or did not arrive. It requires that the transaction takes place directly between buyer and seller.
Payment through some processors counts as a third party and can invalidate the claim. This is a loophole that campaigners are trying to have changed but in the meantime, if you have any doubts ask your finance representative if they are a third-party processor for payments and finance. There is no such thing as a definitive list of companies that use a third-party processor.
Chargeback works in a similar way to Section 75 in that it gives your customer a chance of getting their money back for goods that are faulty, a service wasn’t provided, or the goods were not delivered because the company went bust. It is not a legal right in the same way that Section 75 is. It is part of the service offered by Visa, Mastercard and Amex. The onus is on the bank or card provider to claim the money back from your supplier’s bank. A claim can only be made if all other avenues have been exhausted.
Although there is no limit to the amount you can claim on chargeback, it is less relevant to the home improvement industry because of the time limit imposed on claims. You have 120 days to make the claim but with high cost items it can take longer than that to realise that the company will not rectify the situation.
Differences between Chargeback and Section 75.
|Time Limit||120 days (exceptions for future deliveries)||6 years (5 in Scotland)|
|Amount covered||Any amount (£10 minimum with Mastercard.||£100 to £30,000|
|Amount Covered||Only the amount spent.||Total amount of Transaction|
|3rd party transactions||Yes||No|
Customer’s are always looking for peace of mind. Being able to discuss protection for their money is a handy tool to carry in your sales bag.
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