Section 75 from the businesses point of view

chiefnoodle wrote: »

So there are about a billion articles on the internet about section 75 protection, but all of them are from the consumers point of view.

How does it work from the point of view of the retailer. Lets say there's a dispute between the consumer & retailer about whether there's been a breach of contract, and the consumer makes a Section 75 claim. He bought a used car for £10,000 and paid £5- by card to qualify for protection. The bank accepts the claim and pays the full £10k.

So now what happens. Does the bank try to recover the money from the business? Is the business given a say in the matter or is the business money simply frozen (paypal horror stories coming to mind). Does the bank have to take the business to court or is there a less formal procedure.

How much can the bank recover from the retailer. The bank had to pay up the full £10k, can they claim this full amount back from the retailer? or only the £5 he was paid through the card payment, and the remaining £9,995 is the bank's loss (if they accept the consumers claim).

Anyone had experience with this? Couldn't find info on the internet about this... Any links to proper websites would be great if anyone knows where this information can be found. Thanks!

75. — (1) If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor.


(2) Subject to any agreement between them, the creditor shall be entitled to be indemnified by the supplier for loss suffered by the creditor in satisfying his liability under sub-section (1), including costs reasonably incurred by him in defending proceedings instituted by the debtor.


(3) Sub-section (1) does not apply to a claim:

• (a) under a non-commercial agreement,
• (b) so far as the claim relates to a single item to which the supplier has attached a cash price not exceeding £100 or more than £30,000, or
• (c) under a debtor-creditor-supplier agreement for running-account credit:
  • (i) which provides for the making of payments by the debtor in relation to specified periods which, in the case of an agreement which is not secured on land, do not exceed three months, and
  • (ii) which requires that the number of payments to be made by the debtor in repayments of the whole amount of the credit provided in each such period shall not exceed one.

(4) This section applies notwithstanding that the debtor, in entering into the transaction, exceeded the credit limit or otherwise contravened any term of the agreement.


(5) In an action brought against the creditor under sub-section (1) he shall be entitled, in accordance with rules of court, to have the supplier made a party in the proceedings.


75A - (1) If the debtor under a linked credit agreement has a claim against the supplier in respect of a breach of contract the debtor may pursue that claim against the creditor where any of the conditions in subsection (2) are met.


(2) The conditions in subsection (1) are:

• (a) that the supplier cannot be traced,
• (b) that the debtor has contacted the supplier but the supplier has not responded,
• (c) that the supplier is insolvent, or
• (d) that the debtor has taken reasonable steps to pursue his claim against the supplier but has not obtained satisfaction for his claim.

(3) The steps referred to in subsection (2)(d) need not include litigation.


(4) For the purposes of subsection (2)(d) a debtor is to be deemed to have obtained satisfaction where he has accepted a replacement product or service or other compensation from the supplier in settlement of his claim.


(5) In this section “linked credit agreement” means a regulated consumer credit agreement which serves exclusively to finance an agreement for the supply of specific goods or the provision of a specific service and where:

• (a) the creditor uses the services of the supplier in connection with the preparation or making of the credit agreement, or
• (b) the specific goods or provision of a specific service are explicitly specified in the credit agreement.

(6) This section does not apply where:

• (a) the cash value of the goods or service is £30, 000 or less,
• (b) the linked credit agreement is for credit which exceeds £60, 260, or
• (c) the linked credit agreement is entered into by the debtor wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him.

(7) Subsections (2) to (5) of section 16B (declaration by the debtor as to the purposes of the agreement) apply for the purposes of subsection (6)(c).


(8) This section does not apply to an agreement secured on land.


HTH

My experience relates to a charge back rather than sec 75. A customer disputed an item on their bill. Streamline contacted us and immediately put the amount of this payment back on our account. They asked us to contact them with evidence to show this was a genuine transaction before they would release the money back to us.

In the event the customer had forgotten about buying from us in the weeks before her statement arrived. We contacted her and she could vouch that she had made the purchase. We also supplied paperwork with her signature and the money was credited to us again.

I suspect that with a sec75 the same would happen and they would freeze or take back the payment until the dispute was resolved.

chiefnoodle wrote: »

So the relevant bit is:

I think it is all relevant

chiefnoodle wrote: »

But this doesn't make it clear this applies even if a very small amount is paid by credit card. It seems strange that the credit card company can charge the business £10k when only £5 went to the business through the card! Surely the amount the bank can claim back is limited to the amount which was paid through them

I think you are in danger of believeing the "billion articles on the internet about section 75 protection"

The information supplied by Aquamania above appears to be the law as written.

There is nothing in the law that suggests a creditor should be making decisions on their own accord. The law simply allows a consumer to hold the appropriate creditor jointly & severally liable in any claim against a retailer.

This can be useful where, for example a retailer has gone bust. e.g. a holiday company. The creditor will probably simply refund if it is clear the consumer has not received the goods or services paid for.
(in such a situation, it's unlikley the creditor will get anything back from the retailer ... or if so, only a small percentage)

Also it covers the consumer if the retailer fails to respond etc

But in most cases the creditor will first check with the retailer what the situation is. Assuming a response, then if it is that the retailer agrees they owe the consumer the money, then the creditor will ask why it's not been paid. (and if necessary pay the consumer and take up the matter directly with the retailer)
If the retailer doesn't respond, then again the creditor will probably pay up and hope to recover the money from the retailer when they can

But if the retailer does respond and objects, then the creditor will probably simply agree to be named on any legal claim. This is useful for the consumer as, assuming they then win their claim in court, they can ask the creditor to pay them (and yes the creditor will attempt to get the noney off the retailer)
But that is only if the consumer wins their claim in court.

Try the MSE article for some more info on this
http://www.moneysavingexpert.com/shopping/section75-protect-your-purchases

(hopefully it will be more reliable than the majority of the "billion articles on the internet about section 75 protection" you have come across.)

chiefnoodle wrote: »

Thanks scoly that info was very helpful.

So basically
- if the business fights back then the bank won't take sides, just will allow itself to be added to the claim when/if its pursued in court.
- if the business agrees to the claim the bank will recover the money from them
- if the business is bust then the bank loses

The buyer makes the claim and then proves the breach, the finance co pays the buyer the full amount of the claim regardless of whether they paid £1 or the full amount, the finance co then recover the full amount it from the business. If there is nothing to recover they take the hit.


It's nothing like a charge back, a charge back only takes back what was paid on the card from the seller.


There are really two types of charge back, a charge back for non delivery, breach of contract etc where the banks offer a voluntary service to the consumers which only really works if the bank can claw back the funds from the sellers bank and wont take the hit themselves.


The other is when a card holder disputes the transaction, most notably fraud. In this case the seller must provide the merchant with the proper evidence that the transaction was carried out properly. In person this would be chip and pin, online it would be the card holders details, card details and most importantly the 3 digit number on the back.


If the seller carried out the transaction correctly then they keep the money but if the bank agree it's still fraud then the bank takes the hit. If the seller made a mistake in processing the transaction, then the merchant takes it from the seller.