Section 75 - claim getting nowhere - advise please

ChrisEdu

Good luck. As someone going through something similar, you have my sympathies.

mothership_2

It seems to be as clear as mud

AAARRRGGGHHH!!!!

Thanks all for your advice. I'll write to MBNA and see what happens.

Geteven

Credit Card companies stalling - and even claiming that they will only refund you when they in turn receive payment from the supplier - is not new. As you can read above, meer53's employer (presumably a CC company) attempts to spin this line as well. I had exactly the same explanation from Tesco Credit Card when I tried to register a Section 75 claim recently. Looks like the 'watchdogs' need to be taking this up; I see that in January 2011, the Consumer Association did a mystery shopping exercise Which revealed 71 out of 120 CC agents failed to provide the correct information regarding Section 75 and none of the agents at Tesco or Nationwide passed their test.

The law is perfectly clear - the Credit Card company is just as liable as the retailer - i.e. if you get no joy from the retailer, you can claim the money directly from the CC company. This includes pursuing the CC Company through the courts if necessary. It is NOT dependent on the CC company receiving payment from the retailer. See the excellent guide to Section 75 elsewhere on this site for info and template letter.

moonrakerz

Regrettably, one of the major aids to the CC companies trying to get out of their responsibilities is uncertainty by the claimant. This uncertainty is not helped by incorrect information being posted on this site ! There is already quite a bit in this thread ............

The Law is quite simple: the card issuer is as liable as the supplier. If you pursue the card issuer, HE has to refund you out of HIS pocket.
There was a case (which I can't find at the moment) where a case ended up in the Small Claims Court and the Judge awarded additional costs against the card company because of the way they tried to b******t the claimant about Sect 75.

MBNA tried this with me several years ago - I not only got my money back, but an extra £1000 to "put me in the same position I would have been had the Contract not been broken". I didn't go to Court - I just told them what the LAW said and what they were telling me was rubbish !

chattychappy

Whilst on the subject of credit card companies misleading consumers as to what the law is, when I've taken out new cards I've sometimes had the "hard sell" telling me that unless I take out their insurance I won't be protected against fraudulent use of the card. (Utter rubbish, of course.)

Despite that, I have a sneaky sympathy for them. So much legislation is weighted against them, I don't blame them for having a go. When s75 was dreamt up in 1974 I'm sure it was never envisaged to operate the way it does today.

Geteven

'Financial Ombudsman Newsletter July 2007

We often encounter some common misunderstandings when assessing these [i.e Section 75] cases. The first is the belief among some lenders that consumers can only claim against them after they have first sued the provider of the goods or services. In fact, no such requirement exists and consumers can choose which party to claim against.

Where consumers come to us to check the position, we can point out the lender's mistake. [...] If it seems to us that the lender has misled the consumer about the provisions of Section 75, and this has caused the consumer unnecessary expense or inconvenience, then this is likely to be reflected in any award we may make. '

So four years ago the Financial Ombudsman was writing about this as a problem. Note that the Ombudsman can, and is likely to, award additional costs to the consumer if he feels that the Credit Card company has been misleading the customer.

Geteven

chattychappy wrote: »

Despite that, I have a sneaky sympathy for them. So much legislation is weighted against them, I don't blame them for having a go. When s75 was dreamt up in 1974 I'm sure it was never envisaged to operate the way it does today.

No, no, no! The only way the whole system works is by the Credit Card companies checking out retailers' credentials before granting them a Merchant Account (through Visa or Mastercard). This is designed to prevent 'rogue' businesses from being able to take money from consumers. Section 75 is an excellent incentive for the Credit Card providers to do their checks thoroughly. The CC companies earn money by charging the retailers a fee for each transaction and by charging the consumer for credit. Sometimes businesses go bust or fail to meet their obligations - for the CC companies this is part of their ordinary business risk. For the consumer, Section 75 provides the protection that allows us to confidently use the credit card system. I imagine this is exactly how it was envisaged when the legislation was drafted.

thenudeone

Geteven wrote: »

No, no, no! The only way the whole system works is by the Credit Card companies checking out retailers' credentials before granting them a Merchant Account (through Visa or Mastercard). This is designed to prevent 'rogue' businesses from being able to take money from consumers. Section 75 is an excellent incentive for the Credit Card providers to do their checks thoroughly.

The other side of the coin is that if credit card companies did a thorough credit check of all new customers it would put a brake on economic growth because most new businesses (and many old ones) would be unable to take payment by credit card.

However, there is no shortage of issuers offering cards, so overall it must still be a profitable business model even after the s75 claims:

Income
Annual fees
Penalty charges
% commissions on sales (retailers only receive 95-98% of the sale value)
Interest charges

Costs
cashback / rewards
admininstration
compliance/regulation
Interest on borrowing money (until the customer pays)
meeting s75 claims

chattychappy

Geteven wrote: »

No, no, no! The only way the whole system works is by the Credit Card companies checking out retailers' credentials before granting them a Merchant Account (through Visa or Mastercard). This is designed to prevent 'rogue' businesses from being able to take money from consumers. Section 75 is an excellent incentive for the Credit Card providers to do their checks thoroughly. The CC companies earn money by charging the retailers a fee for each transaction and by charging the consumer for credit. Sometimes businesses go bust or fail to meet their obligations - for the CC companies this is part of their ordinary business risk. For the consumer, Section 75 provides the protection that allows us to confidently use the credit card system. I imagine this is exactly how it was envisaged when the legislation was drafted.

No no no! In 1974 credit cards were very rare and most consumer credit was arranged to buy a particular item. The credit provider had a direct relationship with the merchant - it was often a development of HP.

CCs can do a certain amount of due diligence on merchants, agreed, but bear in mind that visa/mastercard is a global network. s75 is a UK provision - some countries have a similar system, most don't.

We are getting a number of people shopping around on internet, including importing fake stuff from China and then turning to their UK CC to bail them out under s75. Sometimes a chargeback might be possible, sometimes not. Personally I think buyers should be more aware.

I would prefer to see s75 abolished. If people wish to have such an insurance policy, then they can pay for it. I would rather credit cards were just that - a means of obtaining credit to buy something. As it is, under the present system we are all paying for it, like it or not.

mothership_2

Just an update:-

On 4/5/11 MBNA contacted me to apologise for the matter dragging on so long and that bearing this in mind they were prepared to refund (with no admittance of liability) my account with the money. I just needed to sign a declaration that if I received the money back from the flooring firm I would pass on to MBNA. Time estimate 7 days (5 working ones).

Today - two weeks later MBNA rang to say they would be refunding my account now they had got my form back. Time estimate "a few days".

I await the refund with baited breath. I remain utterly unimpressed by the heel dragging and misleading information regarding Section 75 that MBNA seem to routinely trot out. I almost felt sorry for them when I was advised mine is not the only Section 75 dispute with the same floor company and one of the others was for a huge sum. Apparently they will just be getting away with it whilst MBNA take it on the chin (and the consumer pays ever higher prices for it). Why do Trading Standards tell you to claim against the credit card company's yet not chase the rogue traders as well?