£500 car deposit non refunded - section 75?

robinia

Hello all. My first time post. Thank you for any help.

Last year I viewed a car at a car dealer that suited my needs. I agreed price with the dealer (£4000) - subject to inspection. Knowing nothing about mechanics I did not test drive the car but asked if I could have it inspected. Dealer agreed and asked for £500 deposit to hold car. I left deposit on Tesco Mastercard and returned home and booked vehicle inspection online - approx £150.

Inspection took place 3 days later and I was emailed the report that evening. Having read and discussed with the engineer the report I decided not to proceed with the sale. I informed the dealer the next day asking for the return of my deposit by telephone, email and recorded post.

Five days later I recieved letter from dealer refusing a refund instead offering to transfer deposit to another car should I wish.

I immediately wrote to Tesco Mastercard and asked them for a section 75 chargeback. They refused to refund "as I had not supplied proof that refund is due...".

At the beginning of this year I wrote to the Financial Ombudman Service (FOS) with all documented details. Last week I recieved their decision this states that I do not have a valid claim against Tesco Mastercard. Their decision is based on the FOS interpretation of the inspection report. They say that the dealer should have been allowed to rectify the faults identified.

In summary I have lost £500 because the FOS believe that the car could have been rectified by the dealer prior to sale. I understood that the decision to buy was mine not that of the FOS.

I am wary of taking the dealer to court due to costs and possibility of them ignoring CCJ. Do you think it is worth me appealing the FOS decision?

Many thanks for reading this far. Robinia.

[Deleted User]

I always thought the purpose of deposits was they secured the item for you, but also gave the seller some protection in the event of you changing your mind, and some compensation for not being able to sell if to anyone else. So I would expect it not to be refundable. Otherwise there would be no point in taking a deposit.

The transfer of the deposit to another vehicle sounds a reasonable gesture.

I doubt if you will get a better outcome.

lisyloo

A deposit signifies an intention to purchase the car.
It's is not "on hold" or "reserved" as you seem to think.

I have done similar to you but I've always paid a SMALL deposit and got AGREEMENT of a refund if there were problems.

Deposits are normally non-refundable and you have pulled out of the contract due to disinclination i.e. you've changed your mind.

We don't know the nautre of the problems but if they were fixable then you had no valid reason to pull out and didn't give the retailer a change to fix them.

I'd say they are correct.
I would give the following advice.

1) Check your home insurance to see if you can get free legal advice. If so then speak to a solicitor for free.
2) Next time negotiate a smaller deposit (you are in a good position if they want to sell to you). Also get it in writing that deposit is refundable if the inspection is unsatisfactory. Note this still wouldn't cover dis-inclination or minor issues, but would cover you if it's serious.

Deposits are not generally refundable and you haven't given them the chance to fix the situtaion so sorry I don't think you have a case.
I don't think FOS decisions can be appealed.

If you have legal cover (as opposed to just free advice) then ask if they will take it to court - my guess is they'll say no but at least it might give you some closure.

Why don't you transfer it to another car, or let them fix the problems?

vax2002

Never leave an amount of deposit you are not prepared to loose if anyone backs out.
They are legal arguments but there is also Human arguments and that says once they have your cash, its gone.
We see this time and time and time again and car dealers are fly by nights.
The best advice is never leave ANY deposit with a second hand car dealer, go back with cash and if its gone, its gone.

lisyloo

The best advice is never leave ANY deposit with a second hand car dealer, go back with cash and if its gone, its gone.

The problem with that is that it takes a few days to get an inspection done and receive the report. so you'd continually waste £150 (or whatever it is) on getting inspections done.
My advice would be to put down £50 or £100 deposit OR get it is writing that deposit is refundable if there are major issues.
This won't cover you for being unreasonable about minor things that can be fixed which unfortuantely is how this thread is coming across.

chanz4

What were the faults? And why didnt you allow them to fix?

chattychappy

Agree with the gist so far.

It really does come down to what was agreed at the time the deposit was made and the practical issue of whether any of the discussions are evidenced.

If the condition of the car was in anyway misrepresented to you, then that could provide separate grounds.

You could sue. £500 would go small claims track. There is limited scope for recovery of costs if it goes against you. The fee would be £50 (from memory) which you'd recover if you win.

There is always the chance they'll make you an offer or not bother entering a defence or turning up if it goes to a hearing. Or you might win anyway. There is a chance that despite winning you could have a hassle enforcing, or, of course you might lose. If there is a hearing, it will be at a court near to the car dealer.

Frankly if you feel strongly that it was clearly understood you were free to back out following receipt of the inspection report then I'd have a go. If you sound credible, a judge may prefer your story over that of a car dealer.

Lesson is: if you ever part with money, make sure that any promises that have been made or understandings that are important to you are evidenced in writing. Gates and horses, I know.

robinia

Many thanks to all for your advice which would seem to suggest that I have been somewhat foolish and thus lost £500 plus £150 inspection fee. Proving that even at 45 I'm never to old to learn!

Even though all was well documented - I even wrote "subject to inspection" on the deposit receipt - it would seem I have little grounds on which to get back my deposit.

As lisyloo says it would seem an inspection is basically worthless with regards to an informed purchase and I will learn a valuable lesson from this and would hope others do too.

Leave a small, loseable deposit and factor this into the agreed sale price.

On a positive note I have avoided further potential expenditure by not buying the car. One of my major concerns was the report of "contaminated coolant". Having Googled this it would seem that head gasket failiure is not an unknown occurence with the Rover 75.

chattychappy

Well... if the inspection threw up serious concerns, then I think you have a case...

Queries

Dear robinia, I agree with chattychappy that you may have a case re: the inspection throwing up serious concerns. The vehicle should have had any defects sorted out before it was put-up for sale. Also, the FOS, have worked in the industries they adjudicate for, and when they cannot decide who is right and who is wrong, they have, in my opinion, a conflict-of-interest, which will tend to be on the seller's side. Anyway, even if you do not take the garage to the small claims court, it may still be worth sending them a Letter before Action (which is part of the small claims court's proceedings and indicates that you intend to - check out small claims procedure on google). This should include a copy of the engineer's report, a copy of what you have googled re: the engineer's report and a request for the refund of the £500 deposit - you may also be able to get the £150 engineer's report fee back (check out the Sale of Good's Act, i.e unfit for the purpose it was sold - i.e. it should have been roadworthy - which it was not, therefore it was not a case of you changing your mind). - I have no doubt you can word my suggestion, in a much more succinct, clear, manner should you wish to go down this route. Send this recorded-delivery (keeping a copy for yourself) giving the recipient 14 days in which to reply. Also, some benefits for example, Working Tax Credits, should entitle you to a full remission of court fees. Good luck in whatever you decide to do.

Ben8282

I think an action in the small claims court would be the best solution here. I'm a bit out of date as to how you go about it exactly, but I think you go to the CountyCourt, obtain a form to state your claim then pay a fee of, I think, 10% of the claim which you don't get back if you loose.

Explain the case well, emphasising that the purchase was 'subject to inspection', the dealer accepted your 'subject to inspection' endorsement of the receipt and that the inspection threw up very serious faults. Consider if the dealer is guilty of misrepresentation, for example trying to sell you a car worth £250 for £5000 or whatever.

Assuming you are a credible litigant, the judge will be on your side against a dodgy car dealer. Unless the dealer feels their case is very strong, they probably won't even bother turning up. I think you have a good chance.