Section 75 protection - why?

gnaril

The legislation is old, outdated and from what another poster has indicated has completly gone out of hand.

The UK banks who are card issuers have no say on who can get a merchant account and who can accept credit card payments (unless the bank is both an issuer/aquirer of a particular merchant) Whilst you can report dodgy merchants who sell fake goods via the schemes etc, truth be told it doesnt actually do anything or see any result as by the time something is actually looked at the merchant have moved onto another bank/new terminals etc etc.

You can get chargebacks for a lot of things and pull the money back from a merchants bank but the rules are limited by dates/restrictions.

I agree above, it would be great for the legislation to be removed to be honest, or at the very least updated. There is too many grey areas and things have moved on a lot in the past years. Doubt anything will happen thou.

It is good for customers and I have helped so many people over the years with cases where by they would have lost out on thousands of pounds which without this protection would have been stuffed or really unable to pursue themselves.

I personally just think it sucks a bit where the bank has to pay out the money due to some clearly rip of merchant, who is still trading or flaunting consumer legislation and there is no real avenue to pursue them. Yes the banks will take legal action against companies where its cost effective to do so if they have to pay out which they are entitled to do however, in truth its throwing away more money as this route is expensive itself.

Plxply

You've got to remember though that the credit card companies are not interested in chargebacks, look at all the problems people have when they pay with a Visa Debit card and practically have to start a complaint before they can get through to the fraud department or have the problem handled correctly. Section 75 forces them to actually do something, also I'm fairly certain that after a Section 75 claim the bank will then attempt a chargeback on their own accord to recover their own money which they will most likely win.

meer53

A bank will attempt a chargeback before any Section 75 claim as it's far less hassle and the timescales for chargebacks are much shorter. But, the majority of Section 75 claims are usually made where a chargeback has failed.

A lot of the Section 75 claims we deal with have to be looked at by our legal team before we take any action so it's both costly and time consuming. A chargeback is a much simpler process and sometimes is successful !

Road_Hog

The banks always have a choice to opt out of the Visa/MC system and not issue credit cards. The customer needs some protection against businesses that can just charge money to a card number.

I remember a couple of instances in the mid '90s. One was with Microsoft who used to be an internet service provide, back in the days when you paid about £15 a month for 3 hours connection (plus dial up phone costs) and about £3.95 an hour afterwards.

I couldn't cancel the continuous authority for love no money. Microsoft just kept on charging me. I reported my card stolen (and cut it up), so I got a new account/card number. I purposely didn't phone up and activate the new card. But the charge kept appearing.

I had a ridiculous conversation with the card company, where they agreed that the old card had been cancelled and nothing more could be charged to it and the new hadn't been activated, but some how they could carry the charge over from the 'stolen/cancelled' card to the non activated card.

It was only when I demanded that it was fraud under S75 and I was going to report it to the police and refuse to pay any more bills on an inactivated card and report them to the financial ombudsman, that they finally miraculously found a way to stop the charges.

A similar thing happened with a mobile phone company (can't remember which one). I had a monthly contract and I wrote to them and cancelled the direct debit after 12 months (with 30 days notice). I also had phoned them to inform them and they'd promised they'd put a note on the account.

But the monthly direct debit continued. These days with online banking it is easy to cancel DDs, but in the mid '90s you had to ask your bank.

There's meant to be some sort of DD guarantee, but you try getting the bank to enforce it, they just don't want to know. It's always (like the credit card), oh, you have to sort it out with the merchant. I remember going into the bank and the woman saying, have you informed the company that you are cancelling the DD, because if you haven't I can't cancel the DD. It has nothing to do with the third party, if I want to stop money being taken out of my account by DD, that decision is up to me, not the company that wants to take it.

It is for these sort of reasons that customers need protection via S75. Too money companies are happy to take the profit from the transactions, but don't want to know when there is a problem.

chattychappy

Road_Hog - I can't see what your disputes have to do with S75.

meer53

chattychappy wrote: »

Road_Hog - I can't see what your disputes have to do with S75.

Me neither. But Road Hog was obviously quite angry and needed to shout at someone

I'm quite often on the receiving end of people who don't know what they're talking about.

chattychappy

meer53 wrote: »

I'm quite often on the receiving end of people who don't know what they're talking about.

and... you love it so much you come on here in your spare time!:D

SnowTiger

chattychappy wrote: »

I would prefer to see S75 repealed. CCs could then offer insurance to those consumers that wish to take it up. As it is, I feel I am subsidising other cardholder's carelessness.

I wonder if credit card companies really lose out overall because of S75?

Without S75 protection I wouldn't have much of an incentive to use a credit card and might get out of the habit of using one all together, meaning that rather than creaming off around 1.5%+ of the spending I put on plastic my bank would only make a few pennies on each transactions I make (assuming I switched to paying with a debit card instead).

chattychappy

SnowTiger wrote: »

I wonder if credit card companies really lose out overall because of S75?

Without S75 protection I wouldn't have much of an incentive to use a credit card and might get out of the habit of using one all together, meaning that rather than creaming off around 1.5%+ of the spending I put on plastic my bank would only make a few pennies on each transactions I make (assuming I switched to paying with a debit card instead).

Yep I think that's a factor. But CCs could still choose to offer S75-type protection if they felt it would be good for business. They could also remove some of the anomolies - eg extend to additional cardholders, or impose limitations - eg cover for UK merchants only.

IMHO the daftest aspect of S75 is people putting £1 of a transaction onto a CC and paying the rest by another means but still getting full cover from the CC. I expect some people that deliberately use CCs for S75 do this, particularly where the merchant charges a fee for CC use.

Tixy

chattychappy wrote: »

IMHO the daftest aspect of S75 is people putting £1 of a transaction onto a CC and paying the rest by another means but still getting full cover from the CC. I expect some people that deliberately use CCs for S75 do this, particularly where the merchant charges a fee for CC use.

Agree - this is crazy, well its good for me/us as consumers but I'm sure it was never the original intention.
I suppose it came about when people paid a small deposit in cash or part-exchanged a vehicle and so the legislation had to allow for transactions where only a proportion of the purchase value was paid by the finance. But as its works now its really exploiting the original idea of the legislation.