Warning! Don’t use PayPal to pay on a credit card

samwardill

grumbler wrote: »

It's neither similar nor 'watered down'.
On the contrary s75 protection is excessive.
Not in the slightest the fact that it's beneficial for customers and retailers explains why CC companies are supposed to pay for this.

I'm not quite sure why you think section 75 protection is dissimilar to chargeback. Both protect the consumer from merchants that fail to adequately fulfill their obligations.

As someone else pointed out earlier the consumers pay for the section 75 cost in the end. My point is that the consumer has a net benefit (because the section 75 cost is less than the saving from lower prices resulting from increased competition). Retailers and credit card companies also benefit because section 75 stimulates trade. Society as a whole benefits significantly from section 75 protection. I'm not an economist but I'm pretty sure an economist would agree with me.

grumbler

samwardill wrote: »

I'm not quite sure why you think section 75 protection is dissimilar to chargeback. Both protect the consumer from merchants that fail to adequately fulfill their obligations.

Chargeback is equally possible for debit and credit cards.
Chargeback covers only the amount actually paid.
Chargeback doesn't cover concequential losses.
Ultimately it's paid by the merchant or the merchant's bank, not by the card issurer.
Chargeback makes sense. It doesn't have nonsensical restrictions and is applicable to Paypal too.

As someone else pointed out earlier the consumers pay for the section 75 cost in the end.

It was me, but as a customer I don't want to pay extra for the protection that I don't need. I always pay by a debit card if a CC payment costs me.

My point is that the consumer has a net benefit (because the section 75 cost is less than the saving from lower prices resulting from increased competition).

You say so.

Retailers and credit card companies also benefit because section 75 stimulates trade. Society as a whole benefits significantly from section 75 protection.

CCs hardly benefit from this.
If customers benefit from some loophole this doesn't mean that this loophole has to remain.
If society indeed benefits from credit so easily available, that is arguable, extra s75 protection hardly changes anything. If you want to buy something on credit, you will do this regardless.

I'm not an economist but I'm pretty sure an economist would agree with me.

It's not an economical problem/issue to get economists involved. There are various ways to stimulate economy, but not all are acceptable.

stork_2

grumbler wrote: »

It's Visa/Mastercard/... only that can, possibly, have some control over "signing up merchants". As a result, they offer chargeback protection that, generally, has nothing to do with nonsensical s75. Card issuers have no control over this, but for some mysterious reason get held responsible by s75.

Merchant acquirers have absolute control over signing up merchants. No-one is forcing them to do so, it's their choice. Even in the absence of any regulation, anyone starting a card network would for commercial reasons build in a mechanism to incentivize merchant acquirers not to sign up dodgy suppliers.

grumbler wrote: »

And, AFAIK, all 'legitimat debate' was about interpreting the existing law, not changing it or even making sense of it.

I was trying to make the point that a legitimate debate could be had on all these points. On some of the points, the interpretation of existing law has been settled by case law, on others it hasn't, but in either case a debate can still be had about what the law should or should not be.

grumbler wrote: »

Assuming that s75 makes some sense in general (that I disagree with), the card provider has to be liable only for the amount paid by the CC. Nothing extra and no consequential losses.

This doesn't follow. Among those who think that connected lender liability makes sense, there need not be any agreement at all about the necessary extent of this liability.

grumbler wrote: »

Otherwise the only liability of the card provider is within the chargeback scheme. Why does it have to be different for credit cards and debit cards, even if overdraft was used? Again, the only explanation is some nonsensical formality.

.

It doesn't have to be different for credit and debit cards, and yet it is. I agree that this is an anomaly, and it lies deep in the history of payment methods and credit law. I would take the view that the provisions of s.75 should be extended to debit (and charge) cards.

grumbler wrote: »

And, IMHO, s75(2) doesn't make much sense either. Even without it the card provider can sue a UK supplier. If the supplier is abroad, this section is of no use for the CC provider.Again, ultimately its customers who pay for everything, including insurers' expenses and profits on the top.

Without s.75(2), a card provider can only sue a supplier if this is provided for in the (contractual) arrangements between them. As s.75 provides for the lender to take on a liability in excess of that which arises under chargeback, s.75(2) may in some cases provide the only route to redress for the card issuer.

Yes, we all pay for s.75, yet it's very cheap and in my opinion excellent value for the protection it provides.

grumbler

stork wrote: »

Merchant acquirers have absolute control over signing up merchants. No-one is forcing them to do so, it's their choice. Even in the absence of any regulation, anyone starting a card network would for commercial reasons build in a mechanism to incentivize merchant acquirers not to sign up dodgy suppliers.

Yes but does it really make sense that it's not the company that vets merchants is liable under s75, but some absolutely different one, that had absolutely no involvement in the process of 'signing up' merchants?

Under chargeback it's the merchant's bank that is liable and this makes perfect sense.

This doesn't follow. Among those who think that connected lender liability makes sense, there need not be any agreement at all about the necessary extent of this liability.

Sorry, but I don't understand this part.

Yes, we all pay for s.75, yet it's very cheap and in my opinion excellent value for the protection it provides.

All loopholes provide excellent value for someone, but this cannot justify their existence.

GraceCourt

samwardill wrote: »

I'm not quite sure why you think section 75 protection is dissimilar to chargeback. Both protect the consumer from merchants that fail to adequately fulfill their obligations.

Except that "chargeback" is just something that card issuers do as part of their trading operations - it has no statutory basis, and the card issuer cannot charge back if the merchant has ceased trading and gone into liquidation... Section 75 is a legislative provision that enshrines a consumer right in law, both in the jurisdiction of English/Welsh Courts, and in Scotland, and thereby creates a legal liability for the card issuer.

grumbler wrote: »

It's clear from the case law that it doesn't even matter whether they are contracts at all. What matters, as far as the law is concerned, is that there is either directly or through a chain, an arrangement between the debtor and supplier. The mere fact that a supplier holds itself out as, and is, able and willing to accept a credit-card-funded payment indicates that there must be some sort of arrangement for it to do so, and that that arrangement must involve the card issuer either directly or via a chain of arrangements.

If the case law was clear in the way that you claim, this whole thread wouldn't exist. And you haven't actually included a specific reference to this case law, or stated which Court determined it, so none of us can cite this alleged precedent in pleadings at a County Court or (in Scotland) in a Sheriff Court. I'm guessing that it was a decision in a County Court, which isn't binding on any other Court, hence although it might make interesting reading about one District Judge's thinking, it's of no practical use whatsoever for other claimants unless they feel it's worth a try, notwithstanding that they might end up footing the Court issue fee, the hearing fee, and the defendant's witness expenses and fixed costs, as payable under Part 27 CPR 1998.

And we are going round in circles here. It's like trying to nail jelly to a tree - a supplier that is willing to accept credit card payments but only via Paypal is almost certainly not the holder of a merchant services account, so your argument that it is "willing to accept a credit-card-funded payment" is specious - this whole thread exists because Paypal, as an intermediary and not as a merchant services provider, breaks the chain - Paypal accepts the "credit-card-funded payment" and credits that payment to the supplier's Paypal account (in Luxembourg, remember, not in the UK!) in the same way that it will credit a debit-card-funded payment or a Paypal-account-funded payment to that Paypal account... the supplier won't even be aware of how that payment was funded, far less be "willing to accept" one type of payment or another.

I'm beginning to smell "troll" here, because either you don't understand this point of law, or you just keep ignoring it - either way, this detracts from the clear advice to consumers about the very real consequences of having no S.75 rights when making a credit card payment of £100 or more via Paypal, and nothing anywhere in this thread provides anything useful in terms of helping anyone who has foregone those rights, cannot claim from the supplier (e.g. if it has ceased trading) and subsequently is looking for a practical way of obtaining redress by making a claim against the card issuer. Unfortunately, quite simply, with no S.75 rights, they can't, and no-one has outlined a legal basis for doing so, or quoted a binding precedent.

So, just don't do it.

grumbler

GraceCourt wrote: »

... the card issuer cannot charge back if the merchant has ceased trading and gone into liquidation...

This is simply untrue.

Section 75 is a legislative provision that enshrines a consumer right in law, both in the jurisdiction of English/Welsh Courts, and in Scotland, and thereby creates a legal liability for the card issuer.

For some reason, you avoid answering questions about the sense behind 'legislative provisions'.
Yet another one. If this 'legislative provision' is so logical, essential and sensible, why does it cover CCs only? Why do we not have anything similar for debit cards (if , and not only if, overdraft is used)?

And, to be pedantic, the second quote in your post didn't belong to me.

stork_2

GraceCourt wrote: »

If the case law was clear in the way that you claim, this whole thread wouldn't exist. And you haven't actually included a specific reference to this case law, or stated which Court determined it, so none of us can cite this alleged precedent in pleadings at a County Court or (in Scotland) in a Sheriff Court. I'm guessing that it was a decision in a County Court, which isn't binding on any other Court, hence although it might make interesting reading about one District Judge's thinking, it's of no practical use whatsoever for other claimants unless they feel it's worth a try, notwithstanding that they might end up footing the Court issue fee, the hearing fee, and the defendant's witness expenses and fixed costs, as payable under Part 27 CPR 1998.

The case law is perfectly clear that the word 'arrangements' is to be construed widely, wider than 'agreement', and therefore wider than 'contract'.

See OFT v Lloyds at first instance in the High Court, a judgment which was subsequently upheld at the Court of Appeal. Paragraphs 18-30 of the High Court judgment are most relevant here, in particular para. 24. At para. 33, the Judge said, on the question of "whether it could be said that Parliament intended that section 75 liability could be avoided by interposing a merchant acquirer into the arrangements with the supplier", that it could not. There therefore needs to be a very good reason why interposing PayPal into the arrangements would allow s.75 to be avoided, and frankly the FOS have failed to provide any such convincing reason. (For completeness, paras. 49-66 of the High Court judgment add to the original analysis.)

Of course the case law doesn't address PayPal or similar arrangements directly, and this thread exists because the FOS have chosen to take a view which appears (at least to some of us) to be at odds with that case law.

GraceCourt wrote: »

And we are going round in circles here. It's like trying to nail jelly to a tree - a supplier that is willing to accept credit card payments but only via Paypal is almost certainly not the holder of a merchant services account, so your argument that it is "willing to accept a credit-card-funded payment" is specious - this whole thread exists because Paypal, as an intermediary and not as a merchant services provider, breaks the chain - Paypal accepts the "credit-card-funded payment" and credits that payment to the supplier's Paypal account (in Luxembourg, remember, not in the UK!) in the same way that it will credit a debit-card-funded payment or a Paypal-account-funded payment to that Paypal account... the supplier won't even be aware of how that payment was funded, far less be "willing to accept" one type of payment or another.

I'm beginning to smell "troll" here, because either you don't understand this point of law, or you just keep ignoring it - either way, this detracts from the clear advice to consumers about the very real consequences of having no S.75 rights when making a credit card payment of £100 or more via Paypal, and nothing anywhere in this thread provides anything useful in terms of helping anyone who has foregone those rights, cannot claim from the supplier (e.g. if it has ceased trading) and subsequently is looking for a practical way of obtaining redress by making a claim against the card issuer. Unfortunately, quite simply, with no S.75 rights, they can't, and no-one has outlined a legal basis for doing so, or quoted a binding precedent.

So, just don't do it.

I do very much understand the points of law here, and I'm not suggesting in any way that the supplier has a "merchant services account". What I'm suggesting is that it doesn't matter what they have by way of an arrangement, so long as the requisite (chain of) arrangements exists. So, whilst I fully understand the points you're making that the supplier has no "merchant services account" and that PayPal is in Luxembourg and so on, I'm saying that none of that matters.

You can't pay 'absolutely anyone' via credit card via PayPal, and so in line with the Appeal judgment there is both restricted-use credit and arrangements with the supplier (not just with PayPal). Nor is your payment being used for anything other than, ultimately, to finance your transaction with the supplier, so all three requirements for d-c-s under s.75 are met.

The FOS are yet to come up with any coherent explanation beyond a pantomime 'oh no it's not!'/'oh yes it is!', as to precisely how the situation can meaningfully be distinguished from a 'standard' 4-party transaction. You've made valiant efforts to do so in this thread, and I'm sure that what you're arguing is the best argument the card issuers would have if they had to fight this in Court.

stork_2

grumbler wrote: »

This is simply untrue.

For example, under Mastercard's rules, a chargeback under reason code 4855 (goods or services not provided) specifically provides for the situation where the supplier is bankrupt or has ceased trading, allowing the chargeback to be processed before the usual waiting time of 30 days.

donkingkong

Hi. I don't want to double post but I have posted already in https://forums.moneysavingexpert.com/discussion/comment/70402530#Comment_70402530 regarding a section 75 issue I've come across paying using Aliexpress.

Dallybally

Hi. I don't think this has been asked yet, are payments made using PayPal credit covered?

In these cases PayPal is providing you credit, you are not using any of your cards for the payment, then you have to pay PayPal back at the end of the month or in instalments.

I'm presuming they are, as it's a direct relationship between the credit company (PayPal) and the vendor.

Is that right?