Paypal, Credit cards and Section 75 [refunds]

BFG_2

Many people believe that suing a cc for funding paypal purchases covers you under section 75.

Section 75 is the best thing anbout cc's; it means the cc co has joint liability for the purchase, so you get your money back fairly easily if its more than £100.

cc legislation does NOT apply to paypal purchases..so be very careful!!!!!!!

here's the full ruling [not new, but was new to me!!]

Section 75 of the Consumer Credit Act 1974 and payments through electronic money institutions

last updated June 2005
Where section 75 of the Consumer Credit Act 1974 applies, a cardholder who has used their credit card to pay for goods or services has a claim against the card issuer for any breach of contract or misrepresentation by the supplier of the goods or services.

The ombudsman service received a number of complaints against credit-card issuers, where the general circumstances were as follows:

• Mr Buyer holds a credit card issued by Card-issuer plc.
• Mrs Seller is selling an item on the eBay internet auction site.
• Mr Buyer makes the successful bid for the item being sold by Mrs Seller.
• Payment is to made through PayPal (an FSA-regulated electronic money institution).
• Mr Buyer opens an account with PayPal.
• Mr Buyer credits that account with a payment from his credit card issued by Card-issuer plc.
• PayPal transfers the payment from Mr Buyer’s PayPal account to Mrs Seller’s PayPal account.
• Mrs Seller withdraws the payment from her PayPal account.
• Mrs Seller does not send the paid-for item to Mr Buyer.
• Mr Buyer is unable to recover his payment through PayPal or eBay.
• Mr Buyer claims reimbursement from Card-issuer plc.

Compared to the normal use of a credit card to buys goods in a shop, involving PayPal introduces an additional stage in the chain of payment. So, does section 75 apply in such cases or not? That was an issue with wider implications for card-issuers and their customers.
The FSA agreed this was not a matter for it. Issuing credit cards is not an FSA regulated activity and the ombudsman service was already liaising with the OFT (which is the licensing authority under the Consumer Credit Act 1974).
The question was a legal one, but the amounts involved in each case were comparatively small. The issue was not covered by the contemporaneous court proceedings between the OFT and four card-issuers concerning aspects of section 75.
The ombudsman service invited the chairman of the Banking and Loans Liaison Group (on behalf of the industry) and the Chairman of the Financial Services Consumer Panel (on behalf of consumers) to each nominate an expert to provide input.
In 2005, in the light of input from these experts, and from the OFT, the ombudsman service concluded that section 75 did not apply in the circumstances of the cases that had been brought to it.


source: http://www.wider-implications.info/case_studies/wi_03.html

BFG_2

Chargeback in theory does work though: [source: Which? Advice]

PayPal and chargeback


Although payments made through online payment systems such as Paypal are not covered by section 75, they should be covered by the chargeback rules, so it's worth putting in a claim.
When you make a purchase using Paypal, your PayPal account usually takes a corresponding amount from your current account to pay for it, making it easy to track the link between a purchase and its associated payment.
However, if you tend to keep cash in your Paypal account (for example if you've sold an item recently), PayPal will use this money to pay for new purchases, rather than taking it from your bank account. This could make it more difficult to establish the link between the purchase and the payment, although it's still worth putting in a claim, for example if you've missed the ebay and PayPal complaint deadlines or you're not happy with the outcome.

destinystarbuck

Found this out yesterday £175 lost

never-in-doubt

Nice thread however all PP purchases, as with any other online (i.e. cardholder not present) transactions; you can then revert to DSR2000 which will protect you.

soolin

HSBC have actioned a S75 claim for me via paypal and as a seller I have also lost a S75 claim (but I don't know what card company).

Paypal themselves say that a S75 claim is possible but warn buyers that if they go down this route they may have their paypal accounts frozen for misuse. Another forum I am on is urging members to use S75 to regain money for Michael Jackson tickets and some have got claims started, but some have been asked to wait until after the date of the concert.

BFG_2

never-in-doubt wrote: »

... DSR2000 which will protect you.

I thought DSR {Distance Selling Regulations??] only applied to items bought using BIN or fixed prices??

BFG_2

soolin wrote: »

HSBC have actioned a S75 claim for me via paypal and as a seller I have also lost a S75 claim (but I don't know what card company).

Paypal themselves say that a S75 claim is possible but warn buyers that if they go down this route they may have their paypal accounts frozen for misuse. .

So it seems to depend to some extent on the cc company [I know that A&L assured me I WAS covered by S75 [but this was 3 yrs ago]].

bingo_bango

BFG, can you quote the sources for the above please?

soolin

https://www.paypal.com/uk/chargeback

Paypal state that they have to accept chargebacks from credit card companies:

What is a chargeback?

A chargeback occurs when a buyer asks their card issuer to remove a charge from their card statement. The card issuer will ask the buyer to provide an explanation about why they are disputing the charge.

Two common reasons for reversals or chargebacks are:

• A buyer's card number is stolen and used fraudulently
• A buyer makes a purchase, but believes that the seller failed to fulfil their side of the agreement (e.g. did not post the item, posted an item that was very different from the seller's description, or the item was damaged when the buyer received it).

soolin

The paypal help pages being about as sueful as a chocolate teapot also have the same information here..you get this one after logging in directly to paypal.uk

https://www.paypal.com/helpcenter/main.jsp;jsessionid=KNLBFd5QHLympF3KnW3lQ56Glr9Tm8pksPpj5b2j2H8rT5lQ2s1G!-122478607?locale=en_GB&_dyncharset=UTF-8&countrycode=GB&cmd=_help&serverInstance=9006&t=solutionTab&ft=searchTab&ps=solutionPanels&solutionId=163572&isSrch=Yes

What is a chargeback?


Question : Answer : A chargeback happens when a buyer asks their credit card issuer to reverse a completed transaction. Although a chargeback may appear similar to a PayPal buyer claim, it is in fact initiated outside of PayPal between the card holder and card issuer. As such, the outcome is ultimately decided by the credit card company and not by PayPal. Chargebacks are one of the unfortunate costs of doing business. Many sellers factor this cost into their business risk model.

Common reasons why a buyer might file a chargeback include:

• The card holder is claiming unauthorised use of their credit card
• The card holder is claiming they did not receive the item or the item received was different from the original description

Virtually identical to the first one i posted but worded very slightly differently.

peter_the_piper

Thanks for this, may have to use it if (non ebay) paypal claim fails when seller empties account.