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

grumbler

Dallybally wrote: »

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

Is that right?

I think so.

However, if you pay by a debit card and use overdraft (credit), there is a direct relationship, but applicability of s75 cover is questionable. It's all about some legal peculiarities. Common sense doesn't work as the law is nonsensical.

What we know is that s75 works for CCs and finance. Whether "Paypal credit" falls into either of these categories isn't 100% clear to me.
In some degree PP credit is similar to a current account with an overdraft.

GraceCourt

Dallybally wrote: »

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?

No, you have no cover of any sort. One of the major reasons why PayPal (Europe) S.à r.l. & Cie, S.C.A moved to Luxembourg was to avoid having to be subject to financial regulation in the UK - see post number #90 in this thread. Look carefully at the terms of your credit agreement... I will bet that it is with PayPal (Europe) S.à r.l. & Cie, S.C.A itself, and - as has been pointed out in this thread on numerous occasions - it has no corporate presence in the UK. The three limited companies with the word "Paypal" in their titles and with the same registered office in Reading have no connection with PayPal (Europe) S.à r.l. & Cie, S.C.A that will allow the UK companies to be the defendants in any Court in the UK if you have a problem with the Luxembourg company.

Yes, you can use Part 78 proceedings (the European Small Claims procedure) to try to recover any alleged debt against PayPal (Europe) S.à r.l. & Cie, S.C.A, but good luck with that, as your only protection is the hugely convoluted Paypal "User Agreement". Your credit agreement will not be regulated by the Consumer Credit Act 1974 (as amended by the Consumer Credit Act 2006) for the same reasons as set out above - remember, PayPal (Europe) S.à r.l. & Cie, S.C.A is not regulated by the FSA because the company, after careful consideration, chose to do so by moving out of the UK to Luxembourg - its licence expired in 2007 when it did so.

It entered into a voluntary agreement with the Financial Ombudsman service when it moved out of the UK in July 2007 but so what? It didn't go to all that trouble to avoid UK regulation for the benefit of its UK customers! In actual fact, the company is only regulated by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg, and NO-ONE ELSE!

I laugh every time I see their "New Money" advert on the TV because even a cursory search of the Internet reveals huge numbers of people who have found out, too late, that PayPal (Europe) S.à r.l. & Cie, S.C.A is a law unto itself simply because it can be. Stick with a regulated lender, and avoid the hassle.

Ben_Fathers

I'm using paypal for my transaction. This is very helpful, this should be posted to let everyone know.

ozaz

GraceCourt wrote: »

No, you have no cover of any sort. One of the major reasons why PayPal (Europe) S.à r.l. & Cie, S.C.A moved to Luxembourg was to avoid having to be subject to financial regulation in the UK - see post number #90 in this thread. Look carefully at the terms of your credit agreement... I will bet that it is with PayPal (Europe) S.à r.l. & Cie, S.C.A itself, and - as has been pointed out in this thread on numerous occasions - it has no corporate presence in the UK. The three limited companies with the word "Paypal" in their titles and with the same registered office in Reading have no connection with PayPal (Europe) S.à r.l. & Cie, S.C.A that will allow the UK companies to be the defendants in any Court in the UK if you have a problem with the Luxembourg company.

Yes, you can use Part 78 proceedings (the European Small Claims procedure) to try to recover any alleged debt against PayPal (Europe) S.à r.l. & Cie, S.C.A, but good luck with that, as your only protection is the hugely convoluted Paypal "User Agreement". Your credit agreement will not be regulated by the Consumer Credit Act 1974 (as amended by the Consumer Credit Act 2006) for the same reasons as set out above - remember, PayPal (Europe) S.à r.l. & Cie, S.C.A is not regulated by the FSA because the company, after careful consideration, chose to do so by moving out of the UK to Luxembourg - its licence expired in 2007 when it did so.

It entered into a voluntary agreement with the Financial Ombudsman service when it moved out of the UK in July 2007 but so what? It didn't go to all that trouble to avoid UK regulation for the benefit of its UK customers! In actual fact, the company is only regulated by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg, and NO-ONE ELSE!

I laugh every time I see their "New Money" advert on the TV because even a cursory search of the Internet reveals huge numbers of people who have found out, too late, that PayPal (Europe) S.à r.l. & Cie, S.C.A is a law unto itself simply because it can be. Stick with a regulated lender, and avoid the hassle.

[Emphasis in above post modified by me]

My Paypal credit agreement contains the following:

CREDIT AGREEMENT REGULATED BY THE CONSUMER CREDIT ACT 1974

This is a revolving credit limit that can be used to make your retail purchase today and other retail purchases.

Between:

We/us: PayPal (Europe) S.à r.l. et Cie, S.C.A. Soci!t! en Commandite par Actions
Address: 22-24 Boulevard Royal, L-2449, Luxembourg. (R.C.S. Luxembourg B 118 349)

And

You: [my details here]

and

10.3 If you use your Account to purchase goods or services that cost over £100 but not more than £30,000, you may have a claim against us as well as the Merchant if the Merchant breaches their contract with you (for example, the goods or services supplied are unsatisfactory) or the goods or services do not match the Merchant's description.

So I'm confused. Does this mean it is covered by section 75?

grumbler

My understanding is that you are as section 75 is a section of the Consumer Credit Act.

GraceCourt

grumbler wrote: »

My understanding is that you are as section 75 is a section of the Consumer Credit Act.

Fine. We keep going around in circles here. But if the Paypal agreement as quoted by Ozaz is indeed confirmed to be a credit agreement regulated by Section 75, we know finally know for sure - after 9 pages of posts! - why no-one should never pay for a purchase via Paypal, as I warned in the original post, because the creditor for the debtor-creditor-supplier agreement falling within section 12(b) or (c) of Section 75 is therefore PayPal (Europe) S.à r.l. & Cie, and not the issuer of the credit card used to lodge funds with Paypal.

So, the debtor who needs to use Section 75 against the creditor because they can't take action against the UK supplier will have to... yes, commence Part 78 proceedings against PayPal (Europe) S.à r.l. & Cie in Luxembourg! As mentioned numerous times in this thread, I'll just buy from a supplier who has a UK merchant account for processing credit card transactions, and claim back from my card issuer using Part 75 County Court proceedings if this becomes necessary.

At least we can now finally let this thread rest, knowing for sure that the original warning was quite correct.

Orson_Carte

Following the original warning I stopped using Paypal when making purchases on Ebay but instead opted for paying direct with my credit card. I noticed recently that even if you tick the credit card option as opposed to Paypal, the payment still involves them because one is asked to accept the terms and conditions for something called "Paypal Account Optional". On reading these, it states under item 2
"When you use your credit or debit card to purchase goods or services from an on-line merchant via PayPal Account Optional, a sum of electronic money equivalent to the amount of the purchase you are making is issued by PayPal and credited to the merchant’s PayPal account as payment for the goods or services you are purchasing from him. Your credit or debit card is therefore being used for the purchase of an amount of e-money which is in turn being used as payment for the goods or services from the merchant. Your credit or debit card statement will therefore show PayPal as the merchant and not the merchant from whom you are purchasing the goods or services"

Does this mean we are back to square 1 and have reduced consumer protection rights?

Spivved1987

FWIW I think anyone who makes a major purchase through eBay (say £500+) is taking a hell of a risk.

GraceCourt

Orson_Carte wrote: »

Does this mean we are back to square 1 and have reduced consumer protection rights?

In short, yes.

It has been clear that, despite the company relocating to Luxembourg in 2007 specifically to avoid FSA (now FCA) regulation, they seem to be very keen now to "behave" and my understanding is that the new warning is their attempt to make it clear that using Paypal means you have no Section 75 rights, which is the reason I started this thread in the first place (although many have sought to "prove" otherwise, without actually giving a single shred of evidence for their belief).

When all is said and done, dealing with complaints is an overhead that diminishes profits, and as most people who realise - too late - that they have no S.75 rights tend to complain long and loud, PayPal (Europe) S.à r.l. & Cie, S.C.A can now point to the new warning, shrug, and close the complaint, leaving the very unhappy complainant with nowhere to go.

Their explanation of what a PayPal payment entails now removes any lingering doubt about what I've said all along: there are two payment processes, not one, and therefore there is no legal claim against the credit card issuer because the credit card payment did not go to the supplier, only to PayPal.

unholyangel

This might prove interesting reading:
http://www.publications.parliament.uk/pa/cm201314/cmselect/cmhaff/70/70vw05.htm although perhaps poorly worded as although it provides a legal authority that section 75 protection can exist when paying via a emoney service like paypal, its not always the case and depends what capacity paypal was acting in.

Particularly:

The key issues which determine the applicability of section 75 are identified very clearly in Office of Fair Trading v Lloyds TSB Bank Plc and others [2006] EWCA Civ 268 7 and the Bank of Scotland v Alfred Truman (a firm) [2005] [EWHC] 583 (QB). This is legal authority that section 75 protection does exist where one has paid on credit card for a product, via an eMoney service.

As for the poster who thinks section 75 is evil because it holds creditors liable, I'd point out that section 75 entitles the creditor to be indemnified by the supplier for any losses they incur due to a section 75 claim. If the creditor is making so much money they don't think it worthwhile to enforce that section, well thats their call.