Section 75 Claim Rejected

M0neySaver

Hi,

In August I booked to do a training course but it turned out to be a complete waste of time and money.

It was very expensive (nearly £5000) so I asked the trainer for a refund. Unsurprisingly, they refused. I therefore contacted Barclaycard to make a claim under section 75 for breach of contract and misrepresentation.

This week (2 months after I submitted the claim) I received a letter from them asking me to call them. When I did I was informed that they’re rejecting my claim as the supplier of the course used PayPal as their credit card processor.

I’m aware that payments made using the PayPal website aren’t covered by section 75 but I didn’t pay in this way - I gave the supplier my credit card details over the phone and they presumably used PayPal’s virtual terminal to process the payment.

My understanding of this is that paying in this way is just like using a card machine from any other card processor and it should therefore be covered.

Can anyone give me any advice on how to proceed?

Thanks!

Foxy-Stoat_3

M0neySaver wrote: »

My understanding of this is that paying in this way is just like using a card machine from any other card processor and it should therefore be covered.

Can anyone give me any advice on how to proceed?

You understand wrong. To get the protection you needed to of paid the merchant directly and not through a third party like Paypal. What was said on the paperwork/invoice about taking payments over the phone?

Difficult one, maybe for the Small Claims Court, proving that the training course was a waste of money maybe difficult though. What did the other customers say about the course?

eddddy

Hi M0neySaver

Based on what you say, I would agree that the bank's argument about paypal is wrong in this instance.

You didn't pay using your paypal account, and therefore you didn't form any contract with paypal.

You provided your credit card details to the trainer, and the trainer used paypal as their payment processor (i.e. the trainer had a contract with paypal, but you didn't.)

I guess the next stage would be to make a formal complaint to your bank. If that is unsuccessful, then the ombudsman.


However, I suspect that the response you got was a "fob off" following a quick glance at your claim. I think they may come back with more robust arguments.

If you proceed, you need to show that the trainer breached the contract or misrepresented something. (And if the contract/misrepresentation was verbal, it will be your word against the trainer's.)

The course being "a complete waste of time and money" isn't the basis for a section 75 claim.

TBH - I think you'll have a hard fight.

bris

If they provided the course, whether you liked it or not, then a S75 would fail anyway.


You now have 2 fights on your hand, one to prove the paypal payment wasn't paid directly to paypal (which I think you will win) and one to prove the course was mis represented, much harder to do.

Crabman

Section 75 claims can fail because there isn't a debtor-supplier-creditor link, here is one example:

http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=49074

Though I don't think it's fair - how would a consumer know when providing a phone payment that their money isn't going to the supplier?

P.S: Sorry if the link doesn't work, their website leaves a lot to be desired :wall:

M0neySaver

Thanks for the replies.

When I sent my section 75 claim letter in I included a lot of evidence to show that the supplier was guilty of both misrepresentation and breach of contract. The problems with the training were actually so bad that I didn’t complete the course and I felt I had to report the company to the exam board for malpractice. An investigation is currently being carried out into the extent of the problem.

Barclaycard haven’t said anything about not agreeing there’s been a breach of contract or misrepresentation; their only reason for rejecting my claim was that the supplier used PayPal as their credit card processor.

I’ve done some research and came across a very interesting document regarding a case from 2006 involving the OFT and several credit card companies: http://www.bailii.org/ew/cases/EWCA/Civ/2006/268.html.

The credit card companies were claiming that when a merchant acquirer/card processor is involved in a credit card transaction that makes it a 4-party transaction and it’s therefore not covered by section 75 as that only covers 3-party transactions (debtor-creditor-supplier). The verdict in the case was that 4-party transactions are covered too as a) most credit card transactions these days involve a merchant acquirer, and b) consumers can’t know when they buy something whether a merchant acquirer is going to be involved or not.

It seems to me that paying over the phone with a supplier who uses PayPal as their card processor should be covered by section 75 just as it would be if another company such as Worldpay were the processor.

Barclaycard haven’t yet sent me their final decision letter so I’ll write to them again and then go to the Ombudsman if necessary.