Section 75 query / clarification / help !!!!

Webspindles

Hi,

In a nutshell, I'm after a simple-ish answer to this. I operate a small holiday rentals company. People book to stay in holiday villas through my company. I don't offer anything else (no flights, no transfers, hire cars etc). I am not ATOL bonded.

I take bookings via my website and currenly people then pay by cheque or bank transfer. I offer Paypal as a route but it is rarely used. I am upgrading the service I offer to my customers and wanted to take online payments via a merchant account at my bank. (Barclays). Customers have asked for the facility so that they are protected on their credit cards. They (the bank) have informed me that they now only allow their payment system to be used after a risk assessment is completed on the company, as as mine is a travel company that is not ATOL bonded then we have no chance. Apply, if you like, but no chance.

That is baffling to me as the business carries no debt and has no liabilities that need covering. (We simply take the money from a client, deduct a fee, and pay the owner of the villa.)

Anyway, that took me back to Paypal. After a bit of digging I found this on here from Martin in the section 75 area;

• When you buy through third parties. Travel agents, paypal etc.
  You’re usually unlikely to be covered when payments are made to a company that isn’t the one providing you with the good or service because the credit card company must have a direct relationship for them to be equally liable.
  The first main area is paying via an online processer such as PayPal, WorldPay or Google Checkout. Though these can have their own refund systems, they aren't as strong as the legal protection of Section 75.
  There have also been recent cases where people buying goods on Amazon through other suppliers, have been turned down for Section 75 claims by credit card companies. Much opinion is these SHOULD be covered by section 75, but it may be a fight to make it happen.
  The other is buying through a Travel Agent, where it is simply directing you to get a flight from an airline or package holiday from a Tour Operator. You should have ATOL protection for package holidays anyway but flights don’t usually have protection elsewhere. If you're not covered elsewhere, as many travel companies act as an agent of the tour operator, a claim against your card provider could be successful, so give it a try.

So, the clarification. If my customers pay on their credit cards via Paypal for renting accommodation from me that costs, say, £1,000 are they insured, either by their credit card company or Paypal for that £1,000 if I go broke?

If specifics are required, then that typical £1,000 is broken down into 2 payments usually. £200 or so as a deposit paid anything up to a year before the holiday and the balance paid 12-14 weeks prior to the holiday.

Any guidance would be much appreciated!

Saucepot

Get ATOL bonded?

Webspindles

That was our first inclination, but the scheme is aimed at packaged holiday and flight companies (it literally being the Air Travel Organiser's Licence) and we are neither! We are simply leasing agents, for want of a better description, for a single component of a holiday not the full package.

As we are Agents, rather than Tour Operators, the ABTA scheme is also of little help to our customers again its protection schemes are aimed at packaged providers. All the advice I can find comes back to advising customers to pay on credit cards. So, really, I am just trying to get a definitive understanding of where my customers would stand if they paid on credit cards via Paypal, so I can pass the info on to them.

Us being bonded has never been an issue for our customers (most of whom, well over 70%, are repeat customers for a decade or so now), nor has us going broke as they understand our scale and our contentment to operate as we do (no financial risks being taken in expansion etc.) but piece of mind is piece of mind these days I suppose!

jonesMUFCforever

The liability to the bank is that you take all of the rental income - there might be no cottages - the account is cleared before you are rumbled.

I can just see you saying that your local bank manager has known you for years but it is not him/her making the decision.

Webspindles

Yes, like I say, I am slightly baffled by the refusal to look at the individual business circumstances but I understand it from the bank perspective. They have a risk register and the 'headline' of our business puts us at the end with flashing red lights and sirens, thanks largely to a number of tour operators selling most of their holidays below cost price and lo and behold coming unstuck. Even if they were to look and decide we weren't a particular risk, the income from us makes it not worth the effort in reaching that conclusion - as presumably the balance sheet and turnover is the first thing they look at when they get beyond the headline.

So, like I say, I have given up expecting the bank to extend their payment service. What I am trying to get clear in my mind, so I can pass fact rather than presumption on to my customers is where they stand paying on credit cards through Paypal (or a similar third party payment service).

80% of our clients are happy to pay by cheque or bank transfer and we are happy to acept payment that way for the foreseeable future. 15% are happy to pay through Paypal as it is a familiar service to them andf the protection element is not a concern to them. I am seeking the clarification for the 5% who want to pay with a credit card but in a way that they are protected.

It may be that I lose that 5% if they are not protected, that's the life of a small business and I accept that. But rather than lose them on assumptions, I like to lose them (or retain them!) on facts.

I have asked the question of Paypal and had nothing resembling a sensible response, just a generic answer not applicable to my circumstances. I have asked, as if I were a client, the two credit card providers I use and had two different responses, but both of the generic kind and largely putting the onus back on Paypal.

From the quote I started with from the Section 75 article on here, it is the 'unlikely' that is the spanner in the works. Given the way my business works, as I have set out, I was just hoping that someone could convert that to something more specific, either a ' won't ' or a 'will if you do the following'.

Cheers.

dazza.mk

Webspindles wrote: »

So, the clarification. If my customers pay on their credit cards via Paypal for renting accommodation from me that costs, say, £1,000 are they insured, either by their credit card company or Paypal for that £1,000 if I go broke?!

Your customers would not be insured but if paying by Credit Card they could hold the Credit Card liable for your duties.

Namely to provide a booking for the accommodation, no liability to the state of the accommodation, potentially the cottage owner cancelling the booking, changing dates etc.

Personally I'd ignore Section 75 (from your business point of view), I don't think there is anyway to explain it to your customers without suggesting there is a high likelyhood that you think you will be going bust.

Webspindles

Absolutely, it is not something I am going to put on my website or my brochure, just something I can give in response when asked the direct question.

So, the bottom line is that my customers would get no money back if paying on a credit card through Paypal?