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Merchant's breach of the card scheme rules
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daryus
Posts: 24 Forumite
in Credit cards
My scenario:
How can I fix this mess?
HELP!!!!!!
- I am the credit card holder.
- A fraudster used my Visa credit card details to make an online purchase costing £963.35 for a domain name and web hosting.
- Three days later, I realised that the fraud had been committed and reported it to my bank.
- Amazingly, my bank let this transaction go through even though it took me £790.60 over my credit limit!!! Why did they not phone me for authorisation? Was the bank allowed to do this?
- Also, the transaction was completed without using the 3 security digits on the back of the card nor address verification (CV2/AVS). Was the bank allowed to do this?
- Six working days after the fraud, the bank credited me the £963.35 (via the chargeback process).
- 3 weeks later, I signed and returned a fraud declaration form.
- 2 months later after the fraud, the merchant was advised by their bank that they were liable for the chargeback.
- The merchant then circumvented/breached the card scheme rules and attempted to get payment from me directly (even though I am sure that ALL credit card disputes must be resolved through the chargeback process).
- After no success, they issued court proceedings against me.
- I was advised by my bank not to respond to the courts nor attend court.
- The merchant won, by default, and I got a CCJ issued against me.
- My bank then told me they would fix the problem and they dictated the letter to me which I sent to them by recorded delivery.
- 2 years later, I was refused 2 credit card applications so I checked my credit file and, then, realised that the bank had not removed the CCJ.
- I, then, regularly corresponded with my bank and the merchant's Solicitor for a further 5 months.
- The merchant then issued a bankruptcy order.
- I applied to have both the CCJ and the bankruptcy order set aside.
- At court, I informed the Judge that it was credit card fraud, I reported it my bank they credited me the money back.
- Amazingly, I lost the case.
- I appealed and this time went to court with a barrister but, again, lost the case. I do not believe that he handled the case properly.
- More recently, the merchant issued another bankruptcy order which was inclusive of the original amount £963.35 and all of their costs (Total:£7866.94).
- I applied to have the bankruptcy order set aside.
- They did not attend court and therefore lost by default.
- I still have the CCJ outstanding.
How can I fix this mess?
HELP!!!!!!
0
Comments
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4. I would imagine their Ts&Cs allowed them to do so.
5. Yes.
9. Not necessarily. If the bank has decided that the CC transaction is unauthorised, but the merchant still feels they are owed the money, they are entitled to pursue it by alternative means.
11. Why was the bank advising you in this? Was it in writing?
12. To be expected.
14. Why/how would the bank remove a CCJ? It's issued by the court, not the bank, and is a judgement in favour of the merchant. Nothing to do with the bank AFAICS.
15. Again - why the bank?
16-24. What evidence has the merchant provided that you are liable? What documents do you have proving your side?
I'm not sure the merchant has broken any card scheme rules. However, I'm also not sure they would have a claim for the full amount in any case. They could simply cancel the registration and hosting and thus mitigate a large proportion of their loss.
Did they not have any other details of the purchaser of the service? Many merchants log IP addresses, for instance.0 -
Thanks, ...
9. They are legally bound to the card scheme rules. You cannot legally use credit cards outside of the card scheme rules. The rules have the chargeback process for credit card payment disputes.
11. I questioned them at the time on the phone but they were adamant. However, it was not put in writing.
14. I believe that he knew that he screwed up because the dictated letter, delivered to them via recorded delivery, subsequently mysteriously disappeared.
15. I was using one of my bank's credit cards.
16-24. 39 days of emails with the fraudster, to and fro the fraudster's email address, 36 of which were after I reported the fraud!! Aren't I supposed to be innocent until proven guilty? What documents can I possibly have to prove that it wasn't me? Can you prove it wasn't you?
As I've explained, they have breached the card scheme rules as all credit card disputes must be resolved via the banks.
This was a 12 month contract. As you stated, why didn't they cancel it? Even in their own documents, contracts can be cancelled within 7 days for any reason. Cancelling a contract is a lot easier than reporting it as a fraud so why would I report it as a fraud if I did make the payment?
During my investigations, I received an email containing the IP address of the transaction from the merchant's bank. In court, when trying to set aside the CCJ and the bankruptcy order, the merchant stated that under German law they were unable to keep the IP address for longer than 3 months and also that their bank would not divulge an IP address to me even though I had evidence that they did. Cleverly, they did not say whether the IP address was correct.
My instinct is telling me that either:
1. This is a scam which the merchant is involved in.
2. The merchant has a personal grievance against me.
Either way, I believe that the merchant is relying on the ignorance of the general public with regards to the card scheme rules or they are exploiting a legal loophole.0 -
I don't get your point on 9.
If the merchant had sold something, and the card payment was reversed - a chargeback - then as far as the company is concerned they can pursue you directly for payment. Or can't they?
We take card payments at work, and we occasionally get chargebacks. We get a letter from the bank saying the cardholder is saying they haven't authorised the transaction and they require further proof of the transaction, otherwise they will just chargeback. We just wait until the chargeback date, and then contact the person who gave us the card details and ask them how they intend to pay again. In our cases it's normally a mistake (they've forgotten they've made the transaction, or a card's been cancelled because of some other reason) and they just pay again.
Since when were we not allowed to do this? contact the person direct?
Surely if this had happened, the merchant would have contacted you, you'd have said it wasn't you, and it'd gone from there. It sounds like it might have been identity theft here though, rather than just card fraud. Could this have been the case?
The merchant sounds like a right nasty company. Did the fraudster actually get their product then - the years domain name and hosting?Indecision is the key to flexibility
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My point is: Surely, they are not allowed to use the card rules to get the card details and then bypass the rules regarding payment disputes.
If this is allowed then this could be quite a lucrative scam.
My bank accepted that it was fraud which is all that is required under Regulation 21 of the Distance Selling Regulations.0 -
Something does not add up here.
If you have personally been summoned to court, you go, it is nothing to do with the bank.
Did the court decide that no fraud had been commited?
Did the court decide you had actually bought the service?
Did you have any connection whatsoever with the party that did purchase the service?
What advice were you given by your barrister?0 -
My bank accepted that it was fraud which is all that is required under Regulation 21 of the Distance Selling Regulations.
But subsequently, looking at the evidence of both parties, a court decided that the original charge was correct
and it was the chargeback that was unjustified (or maybe even fraudulent).
Why do I have the feeling, that your involvement in that affair is deeper than you have told us so far?0 -
Thanks, ...
9. They are legally bound to the card scheme rules. You cannot legally use credit cards outside of the card scheme rules. The rules have the chargeback process for credit card payment disputes.
And that has been followed. It is no longer a credit card dispute, but it is still a disputed debt.15. I was using one of my bank's credit cards.
But that's irrelevant. Your dispute with the card payment (and your bank's involvement) has ended at this point.16-24. 39 days of emails with the fraudster, to and fro the fraudster's email address, 36 of which were after I reported the fraud!! Aren't I supposed to be innocent until proven guilty? What documents can I possibly have to prove that it wasn't me? Can you prove it wasn't you?
It's a civil matter, not criminal. Innocent until proven guilty doesn't apply, only balance of probabilities. If the evidence they have shows it's more likely than not that you owe the debt, then that's the way the judgement will fall. But you haven't said what evidence they have that you are the purchaser.As I've explained, they have breached the card scheme rules as all credit card disputes must be resolved via the banks.
And it was.This was a 12 month contract. As you stated, why didn't they cancel it? Even in their own documents, contracts can be cancelled within 7 days for any reason. Cancelling a contract is a lot easier than reporting it as a fraud so why would I report it as a fraud if I did make the payment?
During my investigations, I received an email containing the IP address of the transaction from the merchant's bank. In court, when trying to set aside the CCJ and the bankruptcy order, the merchant stated that under German law they were unable to keep the IP address for longer than 3 months and also that their bank would not divulge an IP address to me even though I had evidence that they did. Cleverly, they did not say whether the IP address was correct.
Did you ask all this in court?My instinct is telling me that either:
1. This is a scam which the merchant is involved in.
2. The merchant has a personal grievance against me.
Either way, I believe that the merchant is relying on the ignorance of the general public with regards to the card scheme rules or they are exploiting a legal loophole.
But it's not a legal loophole, and nothing to do with card scheme rules. It's purely and simply a dispute over liability for a debt. They say you are liable (based on some evidence) and you say you are not liable (based on their lack of evidence that it is you, and the balance of probabilites that it isn't you).0 -
My point is: Surely, they are not allowed to use the card rules to get the card details and then bypass the rules regarding payment disputes.
But your point is invalid. They have not bypassed any rules. The payment was disputed and a chargeback was made. The card payment dispute process was followed. Banks and card schemes are not courts and cannot rule on liability for a debt; they can only reverse a particular method of payment if they believe it was unauthorised by the cardholder..If this is allowed then this could be quite a lucrative scam.
My bank accepted that it was fraud which is all that is required under Regulation 21 of the Distance Selling Regulations.
Not sure how it could be a lucrative scam at all. Are you saying they would just pick card numbers at random?
Your bank may have accepted that it was fraud; but again, only a court can rule it was fraud.
And regulation 21 states that a cardholder is entitled to cancel a fraudulent card payment - which you have done. It doesn't prevent a merchant from pursuing a debt.0 -
The only evidence that they presented in court, and in actual fact could present, were emails to/from the fraudster using my name. Interestingly, this company is a web host and they have (WHOIS) facilities on their own web site to trace the email's origin.
Lucrative... Ok. What if 50 fraudulent purchases were made and they took all 50 to court for £963.35 each and they won all 50 cases through similar travesties. (50 * £963.35 = £48,167.50) Lucrative!!!0 -
If the 'debtor' turned up in court in the first place (rather than leave it two years) - or even respond to the claim - then they're unlikely to win much at all. I would imagine the court's view is that, since you didn't challenge the claim or the judgement for two years, the probability is that you owed it.0
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