Paypal, Credit cards and Section 75 [refunds]

pbs_2

I purchased some golf clubs online, I paid using my Barclaycard through paypal. I received the golfclubs, but i did not receive what i had paid for, i contacted the company that sold me the clubs, but they ignore all my emails and now the phone has been cut off, so i take it they are no longer trading. I tried to make a claim through paypal but my claim was thrown out as paypal say i received some goods its for me to sort out. I the contacted Barclaycard asking for a chargeback as i was not covered under section 75 as i paid through paypal, but Barclaycard say there is nothing they can do, is there anything else i can do? I had a similar problem last year, but Nationwide were happy to do a chargeback, so is it upto the individual credit card company weather or not they do a chargeback. Any help would be greatfull, as being stung for over £500 is not much fun

soolin

If you bought from a website (not ebay) then there is no coverage for items not as described so paypal acted within their rules to refuse a claim. Also section 75 more normally only covers items not received, so again I think you would struggle there unless your card specifically covers you insurance wise for this sort of circumstances.

I would suggest if you have a full postal address for seller that you consider money claim online or the small claims court.

BFG_2

Your cc co is wrong when they say there is nothing they can do wrt chargeback. Tell them you insist upon a chargeback being issued. If they refuse, complain officially and then ask for deadlock letter so you can complain to the FSA/Banking Ombudsman [not sure what they are called this week...lol].

Do it in writing as they will deny stuff; don't bother trying to reason with them [after an initial call/letter] - just bring out the big guns.

Make sure you file the chargeback request within [iirc] 120 days of purchase or else you lose out.

Only go to court if you can find the seller/company and you are certain that they have the money to pay or assets that could be seized to cover the debt plus bailiffs.


As an aside: Section 75 covers everything including something not as described. The CC co have 'joint and several liability' ie they are the same as the company, so if company has gone bust the cc is now responsible. Some cards do allow Section 75 on Paypal.....idea here for Soolin....maybe it's worth MSE doing an article on those that do and those that don't???? It would certainly affect my choice of cc if I knew it's position wrt APypal, ebay etc.

pbs_2

Quote ''Your cc co is wrong when they say there is nothing they can do wrt chargeback. Tell them you insist upon a chargeback being issued. If they refuse, complain officially and then ask for deadlock letter so you can complain to the FSA/Banking Ombudsman [not sure what they are called this week...lol].

Do it in writing as they will deny stuff; don't bother trying to reason with them [after an initial call/letter] - just bring out the big guns.

Make sure you file the chargeback request within [iirc] 120 days of purchase or else you lose out.''




I have phoned Barclaycard again, asking for a chargeback. They told me there is nothing they could do. They would have carried out a chargeback if i had paid using the card directly, but as i went through paypal, i am basically on my own. They advised me to go to the citizans advise. I said i would contact the Ombudsman and i was told, you can do that but they have already agreed that credit card companies do not have to do cahage backs when payment has gone through paypal, so by the sounds of it i have lost my £500, unless someone has anyother ideas?

BFG_2

pbs wrote: »

I have phoned Barclaycard again, asking for a chargeback. They told me there is nothing they could do. They would have carried out a chargeback if i had paid using the card directly, but as i went through paypal, i am basically on my own. They advised me to go to the citizans advise. I said i would contact the Ombudsman and i was told, you can do that but they have already agreed that credit card companies do not have to do cahage backs when payment has gone through paypal, so by the sounds of it i have lost my £500, unless someone has anyother ideas?

I'm gonna disagree yet again with Barclaycard [unless they don't do chargeback at all]

http://www.realwire.com/release_detail.asp?ReleaseID=11707

What Consumer Recommendation

What Consumer recommends that online shoppers use a Credit Card for items over £100. This is to ensure the transaction is protected by Section 75 of the Consumer Credit Act which makes the credit card company equally liable for transactions which go wrong. For transactions less than £100 it is recommended that you use a Visa debit card to benefit from the protection offered by the Visa Debit Chargeback Scheme. However, if a trader only accepts Paypal, all is not lost:
Use a Visa Debit Card to make Paypal Payments
When you make a purchase through Paypal using your credit card, you are not covered by the Consumer Credit Act. However, if you use your Visa debit card, you can benefit from the ability to make a claim under the Visa Debit Chargeback scheme. An existing balance in your Paypal account can complicate this, so it is always best to withraw your money as soon as you receive a payment. This makes it easy to demonstrate that a Visa debit card was used for a particular transaction.
It is important to remember that you have 120 days to make a claim to the bank that issued the card.

and from Which? [see last section ref paypal]

Your rights when paying by credit cardChargeback on credit and Visa debit cards

What is chargeback?


Chargeback is a process that allows you to reverse a transaction if you are unhappy with the item received or if your credit or Visa debit card has been used fraudulently.
Chargeback is not enshrined in law like section 75, but is part of the Visa Scheme Rules, which participating banks subscribe to. It applies to all Visa debit cards, and can also be used for Visa credit card purchases where section 75 is not applicable – for goods costing less than £100 for instance. It also covers prepaid Visa cards and Visa Electron purchases.
MasterCard operates an equivalent scheme, but this only applies to MasterCard credit card payments, not to purchases made with a Maestro debit card.
When can chargeback be used?

Like section 75, chargeback can be used in cases of goods not arriving, arriving damaged, arriving not as described, or where the merchant has ceased trading.
Claims must be addressed to the bank that provides your Visa debit card or your credit card, which in turn will put in a request to the merchant’s bank. As a result, you should still get your money back from the merchant's bank, even if the merchant has ceased to trade.
Conditions and requirements of chargeback

The main requirement for compensation is evidence that there has been a breach of contract.
There is also a 120-day time limit on claims. This time limit starts from the day you are aware of a problem, or, in the case of something like flights with an airline that goes out of business, from the day the flight was due to depart.
Chargeback troubleshooting

If you have any trouble when putting in a claim to your credit or Visa debit card provider, try asking to speak to a supervisor. Chargeback is less well-known than section 75, and some bank staff may not be aware of this rule.
If your card provider rejects your chargeback claim, you can take your case to the Financial Ombudsman Service within six months of your final correspondence.
PayPal and chargeback


Although payments made through online payment systems such asPayPal 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.

pbs_2

BFG wrote: »

I'm gonna disagree yet again with Barclaycard [unless they don't do chargeback at all]


What Consumer Recommendation

What Consumer recommends that online shoppers use a Credit Card for items over £100. This is to ensure the transaction is protected by section 75 of the consumer credit act which makes the credit card company equally liable for transactions which go wrong. For transactions less than £100 it is recommended that you use a Visa debit card to benefit from the protection Use a Visa Debit Card to make Paypal Payments
When you make a purchase through Paypal using your credit card, you are not covered by the Consumer Credit Act. However, if you use your Visa debit card, you can benefit from the ability to make a claim under the Visa Debit Chargeback scheme. An existing balance in your Paypal account can complicate this, so it is always best to withraw your money as soon as you receive a payment. This makes it easy to demonstrate that a Visa debit card was used for a particular transaction.
It is important to remember that you have 120 days to make a claim to the bank that issued the card.


Many thanks BFG for the advice. I have had enough of speaking to people at Barclaycard, they just keep giving me different answers everytime i phone. Tomorrow i will phone the 'Financial Ombudsman' and see what they say or suggest. Paypal told me that eventhough they can do nothing they are happy for Barclaycard to do a chargeback, but Barclaycard say they will not help. They just keep saying, you paid via paypal, you deal with it. Most helpfull Barclaycard, Well Done. I do feel people should be made aware that paying by credit card is not always the best way, paypal should have some warning on their website (or maybe that is me being stupid) to let people know they are not covered. I do appreciate your advice BFG, I just hope I do not loose all my £500+. Will report back tomorrow after I have spoken to the Ombudsman

BFG_2

I do feel people should be made aware that paying by credit card is not always the best way,

IMO paying by credit card IS the best [and only] way; in fact if you can't involve your credit card somewhere in the purchase I would advise NOT purchasing.

No CC, No Buy.

Good luck.

The FSA/BO will probably tell you to go back to cc co and ask for deadlock or rejection letter, or hopefully they may tell you what bit of the regs to quote to them.

[I will also say it again......don't waste your time calling them and trying to get them to see reason, write to them and make your complaint official.]

AdrianW2

pbs wrote: »

I have phoned Barclaycard again, asking for a chargeback. They told me there is nothing they could do. They would have carried out a chargeback if i had paid using the card directly, but as i went through paypal, i am basically on my own.

That's the bank's position (you use you credit card to buy ecash, and then ecash to buy the goods), but it hasn't been tested in court.

There are two major stumbling blocks in the bank's case here. The first is the PayPal receipt, which says (or did when I last looked) that you've used your credit card to buy a particular item.

The second is that when the OFT took them to court over the foreign transactions issue, the Court of Appeal (upheld by the Lords) was of the view that multiple party transactions are covered by s.75:

"For these reasons we have reached the conclusion that connected lender liability under section 75 of the Act attaches to all transactions entered into using credit cards issued under consumer credit agreements regulated by the Consumer Credit Act 1974, whether they take place within a three- or four-party structure and whether they are entered into in the United Kingdom or elsewhere."

BFG_2

AdrianW2 wrote: »

"For these reasons we have reached the conclusion that connected lender liability under section 75 of the Act attaches to all transactions entered into using credit cards issued under consumer credit agreements regulated by the Consumer Credit Act 1974, whether they take place within a three- or four-party structure and whether they are entered into in the United Kingdom or elsewhere."

So are you saying that the FSA position [that paypal transactions are NOT covered by Section 75] is 'wrong' ie at odds with the OFT view??

Now that is interesting.

\
AFAICR Paypal is based in Luxembourg [tax and legislation avoidance], but they agreed to be bound by certain UK regs and guidelines...do you know which ones??

AdrianW2

I wouldn't go that far. The banks tried to wriggle out of their s75 liability by claiming that the cardholder->card issuer->merchant acquirer->merchant relationship absolved them of responsibility because there was no direct card issuer->merchant link.

The OFT and the Court of Appeal rejected that argument.

In my view PayPal are just another merchant acquirer, the fact that they have a consumer facing business as well is irrelevant, and I believe that the Court of Appeal's logic applies to them as well. As far as I'm aware the OFT have expressed no view on the subject.

I don't know how PayPal's move to Luxembourg affects its regulation. I suspect it submits voluntarily to the FSA complaints procedure, knowing full well the FSA always finds in favour of the bank.