Paypal purchases - be careful of your consumer rights

GraceCourt

I hope that the rules on cross-posting do not forbid me adding this post, to draw attention to the fact that Paypal appears to be taking a lot of trouble to avoid the service of County Court claims notices on it, despite the fact that its legal agreement with its users claims to be subject to English law... if anyone has successfully identified the correct English-registered subsidiary on which service of legal process can be effected under English law, it would be useful to have it posted here.

When you interact with Paypal in the UK, you are dealing exclusively with a Luxembourg-registered company, not one of the three Paypal limited companies registered at an address in Richmond, Surrey.

See https://forums.moneysavingexpert.com/discussion/comment/42561222#Comment_42561222

Edit - I should clarify that I am NOT referring to Paypal auctions, but to any payment made with a credit card through Paypal's systems.

GraceCourt

Re the matter of a relative's dispute with a Northern Ireland supplier who sent two items of flat-pack furniture that arrived damaged, and my subsequent warning about avoiding the use of Paypal to process credit card payments to a third party - and never using them if the seller/supplier is outside England and Wales - listed above...

I've finally managed to get beyond the "droids" that have been sending boiler-plate responses to my e-mails. Interestingly, Paypal themselves have confirmed the loss of many of the buyer's legal rights when their services are used... a response from their "Office of Executive Escalations" confirms that:

It should be noted that Distance Selling Regulations do not apply to financial services such as PayPal. PayPal as the payment processor is not bound by consumer law; and the Distance Selling regulations would apply to the contract between the buyer and seller.

PayPal's Buyer Complaint process is an independently offered goodwill programme. The programme simply entitles us to decide if our own conditions have been met. If you wish to seek redress under Distance Selling regulations, your best course of action would be to address the issue directly your [sic]merchant or seller; or to pursue the merchant through the Small Claims system under the relevant consumer legislation.

Well, I never even mentioned the Distance Selling Regulations, which aren't the issue in this case - the goods were simply not of merchantible quality, and were rejected as such under the Sale of Goods Act 1979 (as amended by The Sale and Supply of Goods to Consumers Regulations 2002). But the principle is the same... if the seller is outside England and Wales, then as you are dealing with Paypal's Luxembourg company, you can't take any action against either of them using the Small Claims Track of the County Court (or indeed at all, because they are outside the jurisdiction of the English Courts, despite their claim - rather puzzlingly - that English law applies to the Agreement).

So, in simple terms...

When you pay a supplier using a credit card via Paypal - even if you don't use a Paypal account - you lose all of your S.75 Consumer Credit Act 1974 rights and protection...

DON'T DO IT!

Oliver14

As I said in your other thread you seem confused

GraceCourt wrote: »

I've finally managed to get beyond the "droids" that have been sending boiler-plate responses to my e-mails. Interestingly, Paypal themselves have confirmed the loss of many of the buyer's legal rights when their services are used... a response from their "Office of Executive Escalations" confirms that:
Well, I never even mentioned the Distance Selling Regulations, which aren't the issue in this case - the goods were simply not of merchantible quality, and were rejected as such under the Sale of Goods Act 1979 (as amended by The Sale and Supply of Goods to Consumers Regulations 2002). But the principle is the same... if the seller is outside England and Wales, then as you are dealing with Paypal's Luxembourg company, you can't take any action against either of them using the Small Claims Track of the County Court (or indeed at all, because they are outside the jurisdiction of the English Courts, despite their claim - rather puzzlingly - that English law applies to the Agreement).

Of course the SOGA or DSRs do not apply to paypal. They are not the business you are dealing with. they are the payment method

GraceCourt wrote: »

So, in simple terms...

When you pay a supplier using a credit card via Paypal - even if you don't use a Paypal account - you lose all of your S.75 Consumer Credit Act 1974 rights and protection...

DON'T DO IT!

It's been well known for years that section 75 doesn\t apply to third party payment. Over the past year more banks and card issuers have been allowing section 75 on paypal payments

Paypal buyer protection has nothing to do with SOGA or the DSRs as your contract is with the company you a buying from. So why would they. Paypal buyer protection is useful extrs consumer protection for when companies refuse to act within consumer protection law as a customer can get a refund without having to resort to small claims.

Also if you buy internationally obviously British consumer lawa does not apply so Paypal protection is a good way to proyecy yourself and insuring you get refunded.

arcon5

If your a buyer then PayPal is probably the safest method you can use! They almost always side with the buyer in any dispute, irrespective of the sellers terms & conditions or whether the seller is in the right!

But as above said, you DSR are enforced with the seller and not with the payment processor.

GraceCourt

Oliver14 wrote: »

As I said in your other thread you seem confused Of course the SOGA or DSRs do not apply to paypal. They are not the business you are dealing with. they are the payment method

I'm not confused, but perhaps you are. When a credit card company is a party to a contract of sale, that credit card company is a second party to the contract in the same way as the supplier. So a credit card company is equally liable under SoGA in those circumstances. My whole point in flagging this up is to highlight that a credit card payment made via Paypal results in the loss of those contractual rights. This is even more important when the buyer and the seller are (as in this case) in different legal jurisdictions within the United Kingdom. You did read the detail, didn't you?

Oliver14 wrote: »

Over the past year more banks and card issuers have been allowing section 75 on paypal payments

It's not a matter of whether any individual issuer "allows" S.75 rights - we are discussing legal rights here, and as you say yourself, they don't exist for third party payments. Any payment made for goodwill reasons is a bonus, but these don't set any precedent in any way whatsoever and therefore cannot be relied upon by a buyer.

Oliver14 wrote: »

Paypal buyer protection has nothing to do with SOGA or the DSRs as your contract is with the company you a buying from.

And, as stated, also jointly with the credit card company if you don't use Paypal!

The point is, I hope, well made for the majority of forum readers - even where they do have consumer protection under UK legislation (purchases in England, Wales, Scotland, and Northern Ireland), if they are making a credit card purchase from a UK seller located in another jurisdiction - e.g. a purchase by a buyer in England or Wales from a seller in Scotland or Northern Ireland - they should avoid the use of a Paypal Checkout or the use of a personal Paypal account if they don't want to lose their right to a S.75 claim from the credit card issuer.

Oliver14 wrote: »

Paypal buyer protection is useful extrs consumer protection for when companies refuse to act within consumer protection law as a customer can get a refund without having to resort to small claims.

Maybe, but far, far less useful than having the ability to enforce all of your contractual rights (including any additional entitlement to damages, e.g. return postage costs - not just the amount paid!) against the credit card issuer!

Strangely, no-one seems to share my concern that the "Paypal user agreement", which claims that English law applies, isn't enforceable because all of their dealings are with a private company based in Luxembourg where no legal process from any jurisdiction in the UK can be served! And Paypal consistently ignored every single question put to it about this... six requests. So if Paypal won't refund you or honour anything in the "agreement", you can't even enforce any legal rights at all against them... :eek:

arcon5 wrote: »

If your a buyer then PayPal is probably the safest method you can use!

Absolutely not, for the reasons explained above... unless by "safest" you mean "close eyes and hope for the best"...

wealdroam

When you buy something via paypal with your credit card the following happens...

1) you pay money to Paypal.
my understanding is that it is this transaction that has protection by Section 75 of the Consumer Credit Act 1974.

2) Paypal then pays money to the 'real' seller.

As you can see, the credit card company takes no part in the second transaction.

So the credit card company are jointly responsible with paypal for providing the service that you have purchased from paypal. I.e. passing your money to the 'real' seller.
Surely that is the end of the credit card company's involvement.

Clearly it would be nice if the protection went further down the chain, but you are not interested in that.

IANAL and am happy to be corrected.

peterbaker

What a very important warning you have raised OP - it was obvious that with PayPal moving their jurisdiction around that they were not safeguarding anything for the consumer's benefit. I imagine what you have highlighted is just one hole that appeared in their stocking as they hastened over the fences to their current location.

Oopsadaisy

Correct!!!!

Paypal funded using a cc does not have S75 protection, because it breaks the consumer-card-retailer link.

Quite a few cards will payup.

A better option for a problem paypal purchase is to try a cc chargeback [120 day limit iirc].

shaun_from_Africa

I imagine what you have highlighted is just one hole that appeared in their stocking as they hastened over the fences to their current location.

But as already stated, it wouldn't make any difference whether Paypal were located in London or Luxembourg.
The only location that is relevant is that of the seller and not that of the business that you use to transfer your money.

When paying with a credit card via a money transfer service, the credit card company is not, and never has been liable under the CCA for breeches made by the supplier of the goods in question.
This applies not only to paypal related payments, but also to Western Union, Moneybookers and all other similar services.

Oopsadaisy

I think the annoying thing is that PAypal implies it is megasafe....when it's patently not.

GraceCourt

wealdroam wrote: »

When you buy something via paypal with your credit card the following happens...

1) you pay money to Paypal.
my understanding is that it is this transaction that has protection by Section 75 of the Consumer Credit Act 1974.

2) Paypal then pays money to the 'real' seller.

As you can see, the credit card company takes no part in the second transaction.

So the credit card company are jointly responsible with paypal for providing the service that you have purchased from paypal. I.e. passing your money to the 'real' seller.
Surely that is the end of the credit card company's involvement.

Clearly it would be nice if the protection went further down the chain, but you are not interested in that.

IANAL and am happy to be corrected.

No correction necessary, wealdroam, you have succinctly summarised the position, and by doing so you have explained the problem in a much clearer way - that being, as I've tried (perhaps only partially successfully!) to make clear, that the use of PayPal means the complete loss of all S.75 rights in relation to the goods supplied by the actual seller.