Interesting article on Paypal chargebacks via credit card

molar

http://observer.guardian.co.uk/cash/story/0,,2005234,00.html#article_continue

"Under section 75 of the Consumer Credit Act, purchases made using credit cards will usually be refunded by the card issuer if the goods fail to arrive or are faulty on delivery, provided the shopper makes the purchase directly from the retailer. But if the shopper makes the purchase via a payment system such as PayPal, where you actually buy 'units' with which to shop online, the shopper has no legal right to claim money back from the card company."

So has anyone successfully done this despite what the above article says? I have left it too late to do a chargeback via Paypal so I'm now trying to do one on Paypal through my CC company.

soolin

The Observor article seems to be mistaken. Nochex buy 'units' which is why credit card chargebacks fail with them, but paypal merely act as a straight handler and pass your money onto the seller.

The way I have seen this explained is that when you buy something your credit crd company show the name of the retailer after paypal on your bill, for example 'paypal-john smith books ltd'.

With the last two chargebacks I did I had approached my credit card company (HSBC) in case paypal did not pay up, and was told that I had to go through the paypal system first and if I failed to recover funds then they would provide me with the necessary forms and I could reclaim my money. These were both non delivered items, I wasn't claiming for damage or anything and don't know if they could have helped if that had been the case.

justpaper

i opened a dispute with paypal 2weeks on & no reply from seller, so i called mastercard and told them what happened (non delivered item),.i then was told to go thru paypal,. but i said i dont want to claim thru paypal* so they told me to - send in ebay item number paypal payment page print out, the case is on going,

* the thing with paypal is if the seller has taken the money out and closed his/her account or there is no money in the account paypal wont pay out and wont chase the seller for the money,. and everyone thinks paypal = protection,. much better off using Nochex like Soolin pointed out,.


just to add on-

3 months ago i got my money back from a Hosting company that had a good go at ripping me off,. and that was paid with my debit card via paypal and i went str8 to my bank and they got my money back,. i didnt even start a paypal dispute,.

Alfie_E

soolin wrote:

The Observor article seems to be mistaken. Nochex buy 'units' which is why credit card chargebacks fail with them, but paypal merely act as a straight handler and pass your money onto the seller.

It’s rather more grey than that. PayPal and Nochex are both e-money providers, under the EU and UK definitions of e-money. Your “units” are really e-money. With both companies, the payment from a credit card is used to generate e-money. As you are buying only e-money, there’s no possibility of chargebacks. However, both are also acting very much like traditional payment service providers. A business would use a payment service provider when they want to take card payments from their customers, but they don’t want the hassle of processing card transactions themselves. Where a payment service provider processes the transaction of behalf of another company, you certainly are allowed to chargeback.

So, what are they? E-money providers? Payment service providers? Well, a bit of both. Both PayPal and Nochex initially took the decision to deflect all chargeback claims by playing the e-money card, as it was in their commercial interests to do so. As PayPal grew, this position became increasingly untenable, especially in their home country of the USA, where chargeback rights are mandated by law. After legal challenge and huge pressure from Visa and Mastercard, PayPal agreed to acknowledge that they act as a “merchant of record”, thus making them liable to chargeback claims.

This is only sensible. More and more large companies who were previously processing all their card transactions themselves are starting to offer payment by PayPal. And, smaller companies who use a payment service provider like WorldPay are also starting to accept payment by PayPal. It would be unacceptable for a customer’s chargeback rights to be dictated by which processing company he or she happened to choose during the website checkout process.

Snooze_Control

justpaper wrote:

i3 months ago i got my money back from a Hosting company that had a good go at ripping me off,. and that was paid with my debit card via paypal and i went str8 to my bank and they got my money back.

There must be more to it than that as that doesn't happen. The bank can't do anything if you've paid by debit card as there is no "charge back" facility to enable it to be done.

SC

justpaper

Snooze_Control wrote:

There must be more to it than that as that doesn't happen. The bank can't do anything if you've paid by debit card as there is no "charge back" facility to enable it to be done.

SC

well i wouldnt say the bank cant do anything cuzs they did in my case, i dont think my case was special at all,. i know alot of ppl think paying by d/card is like paying with cash (i kinda thought that my self)... theres no come back,.

i was thinking i wouldnt be able to get my money back at all cuzs i used a D/card, but i called the debit card services up anyway ..1st i was told i cant i said ok,. i hanged up and called again so now im told i can...seems to be a different process on the back end for D/cards (some lady is telling me this on the phone), ur right its not the same as a CC chargeback. but its a chargeback, (i was told to send in proof to start the case) i had proof the hosting firm said they would refund my money if i closed my account in 6 days etc,. so i did and they didnt want to refund me,. and the case started,. i won,.

i also bought a faulty item that was listed as a 20GB HDD lcd damaged ipod but what i got was a ipod with no 20GB HDD,. i was told now i can claim for that but i sold the ipod's logic board for 40GBP at the time so i made my money back kinda ish and i dont wanna make a fraud claim,.

ukbill69

Ring your card company and say you do not know what the item is, they will then send you a form to sign, you get your money back with interest and then you might get another form to sign, are you sure you do not know what this is, then sign it, send it back and paypal shows a dispute in your account, but says no action needed and then after a month or so it gets removed and all happy.

mcwarre

ukbill69 wrote:

Ring your card company and say you do not know what the item is, they will then send you a form to sign, you get your money back with interest and then you might get another form to sign, are you sure you do not know what this is, then sign it, send it back and paypal shows a dispute in your account, but says no action needed and then after a month or so it gets removed and all happy.

That is really bad advice as you are quite clearly telling people to lie. When you do this on a credit card form you are liable to criminal prosecution.

MSErs ignore ukbill69's advice it will end in tears and possible prosecution

Tirian

soolin wrote:

The Observor article seems to be mistaken. Nochex buy 'units' which is why credit card chargebacks fail with them, but paypal merely act as a straight handler and pass your money onto the seller.

The way I have seen this explained is that when you buy something your credit crd company show the name of the retailer after paypal on your bill, for example 'paypal-john smith books ltd'.

With the last two chargebacks I did I had approached my credit card company (HSBC) in case paypal did not pay up, and was told that I had to go through the paypal system first and if I failed to recover funds then they would provide me with the necessary forms and I could reclaim my money. These were both non delivered items, I wasn't claiming for damage or anything and don't know if they could have helped if that had been the case.

Whether your bank refunds you is entirely up to them - as stated above, Paypal is not merely a "straight handler" ... when you pay through Paypal with your credit card you are actually buying e-money from Paypal with your credit card, and then sending that e-money to the seller. What you actually purchased with your credit card payment was the 'e-money' - and since this is immediately credited to your ebay account, you have no automatic right to a chargeback since you actually got what you paid for. If you send someone the e-money that you have bought, and they fail to deliver goods to you in return, that is then a matter between you them and Paypal - your bank does not come into it any more.

When Paypal originally changed their t&c for the UK users to specify this "e-money" set-up, it was actually in order to legally prohibit sellers charging the Paypal fees to buyers on eBay - in UK law it is a legally protected right of vendors to pass on credit card processing fees to customers. However, by re-defining the Paypal payment process, they enabled themselves to evade that requirement. See the following, straight from Paypal UK t&c:

"PayPal is an electronic money payment system. When you accept a PayPal payment, you are accepting e-money. You are not accepting a debit or credit card payment, even where the sender may have funded his or her PayPal account with a debit or credit card in order to fund the transaction with you. Nothing in this policy is intended to affect the legal right of a merchant in the UK to impose a surcharge for a debit or credit card transaction under the Credit Cards (Price Discrimination) Order 1990."

This is why it amuses me when people get so agitated about sellers asking for a surcharge to receive Paypal payments - it's actually their legal right to do so, but eBay/Paypal wriggled round it on a technicality. I never fail to be amused at the irony of people on a moneysaving website vigorously defending a huge financial institution for indulging in shady manoevering to prevent people from recovering costs that they should legally be entitled to!!

nightswimmer

Tirian wrote:

This is why it amuses me when people get so agitated about sellers asking for a surcharge to receive Paypal payments - it's actually their legal right to do so, but eBay/Paypal wriggled round it on a technicality.

In other words, because of that technicality it's *not* their legal right to do so.

I never fail to be amused at the irony of people on a moneysaving website vigorously defending a huge financial institution for indulging in shady manoevering to prevent people from recovering costs that they should legally be entitled to!!

Where's the irony? Whether PayPal is right or wrong to use this technicality is a totally seperate matter to the fact that currently, you are not allowed to charge a surcharge to cover PayPal fees.

Tirian

The law was instituted to protect the right of vendors to pass on the cost of credit card transactions. The fact that when the law was passed, the internet did not exist does not alter the fundamental precept which was that a seller should be allowed to confer a charge for accepting payments originating from a credit card.

The fact that Paypal changed some words and described what they do in a different way - without actually changing anything that they were actually doing merely in order to obey the letter of the law whilst thumbing their nose at the spirit of it is a mockery of law, nothing else.

Personally, I think they would be on extremely shaky ground if they were to be taken to court by a good legal team on the matter - I am not so sure that they can simply play semantic games like that and claim to suddenly be doing something completely different merely because they've used different words to describe it.

However, since they are massively rich and I am not, there's not much chance of seeing that argued out anywhere that it would matter.

The irony is that on a moneysaving website, I would largely expect people to protest against dirty tricks by a big company to fiddle people out of a right established by law - but instead everyone seems to rally to their defence. It's frankly bizarre.