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

GraceCourt

unholyangel wrote: »

This might prove interesting reading...

It might be interesting, but unless you are offering to fully underwrite the legal costs of everyone who tries to recover their losses using Part 27 proceedings in the County Court (because Rule 27.14 CPR 1998 prevents each side claiming their legal costs from the other, except for the "fixed issue" fee), it's fairly irrelevant.

This web site doesn't agree with you, the Financial Services Ombudsman doesn't agree with you, and as pointed out above, it looks as though PayPal (Europe) S.à r.l. & Cie doesn't agree with you, given the warning that the company now clearly displays when consumers are about to use the service.

Notwithstanding the fact that we keep going round and round and round in circles on this one, the advice clearly set out in the original post still stands and no-one - as I keep on saying - has provided details of any actual proceedings where this theory has been tested and upheld in a real, successful County Court claim. So, if you decide to take the risk, you are either mad or extremely wealthy (or perhaps both). Lesser mortals - don't pay sums of £100 or more via PayPal using a credit card because you won't have any Section 75 CCA 1974 rights. And beware unqualified legal "experts" who tell you something is safe when everyone else is telling you the complete opposite.

How many more times does this need to be said??? :rotfl:

Forgetful46

I have read the article on Section 75, the fact that using PayPal results in not being covered AND I have read what cover PayPal offers, but I need some help.

I need to pay a company to erect a small wooden veranda/canopy at the side of my house. The terms are 30% upfront, 50% on delivery and the balance on completion.

The company in question has numerous positive 'testimonials' on its website and the gentleman that came to measure (a Director of the Company) seems decent enough. That said, with all the scams going on I am worried about 'just doing a bank transfer' as I am conscious that then, let's say the materials/fitters etc. never turn up/the company disappears/goes bust, then what? I would have lost all my money (albeit 30% of the total, but still a fair old whack).

I remembered that by paying some of the balance on my credit card I would be covered (but forgot the PayPal bit to be honest). When the gentleman/Director came to measure up and I agreed (verbally) to go ahead, I asked to pay on my card and was upfront as to why. He told me the only way I could pay by card was to pay via PayPal and has since sent me an email with a link in order to do this (a nice touch is the balance payable is the 30% with a whopping 3.8% charge for the privilege).

Being somewhat aggrieved about the charge I have not yet paid and have been thinking about this all day...and then I had an epiphany - I remembered that paying via PayPal would break the direct link between the credit card company and the supplier, therefore I wouldn't be covered by Section 75 anyway AND be an extra £50 odd out of pocket.

PayPal's 'Buyer Protection' won't be of any help, as far as I can gather, as the item I am purchasing is 'custom made'.

The only glimmer of light is the paragraph (in the original MSE article) which says I could be covered if "the company you're buying from has a 'Commercial Entity Agreement' with PayPal". I have no idea if it does nor how to find out.

I did originally do a search on the company at Companies House, to no avail. So, on his second visit, I asked the 'gentleman/Director' what the company's name was as the trading name is completely different (and nowhere on their website is the actual company name itself). Companies House shows their accounts are up to date; the guy who visited is no longer a Director as he resigned in 2015 and it is his son that is an actual (and sole) Director and whilst there was a 'First Gazette notice for compulsory strike-off' in August 2015 it was discontinued in October 2015.

So now I do not know what to do, but know I need some protection. Does anyone know either:

1. How I find out if the company does indeed have a 'Commercial Entity Agreement' with PayPal?
2. If it does not have this agreement in place, how can I pay the deposit but still have some protection?

Obviously any help gratefully received.

Thank you.

GraceCourt

You are quite right to be cautious, and in all honesty if this was me, I'd not bother making any enquiry about a "Commercial entity agreement" because the very fact that the company can only accept credit card payments via PayPal means that trying to establish S.75 rights is wasted effort.

Before offering some advice, you ought to be aware that the absence of the company details from the Web site means that it does not comply with its legal responsibilities as a limited company (Regulation 25 of The Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2015, made under Sections 82 to 85 of the Companies Act 2006). If the company is registered for VAT, the VAT number should also be listed. Regulation 28 makes non-compliance with Regulation 25 a criminal offence, committed by the company itself and by each of its directors.

I suggst that you should check whether the company's last filed accounts show that it has an adequate level of assets. You can do this free on some Web sites that supply company information... PM me if you need a pointer to one - I have no connection with the site that I will suggest other than that I use it myself! The company should be able to provide you with sufficient details of satisfied customers that will enable you to verify that these "testimonials" are genuine - if they won't, consider it a red flag. Is the company a member of a trade body and/or does it offer any additional quality guarantee or warranty? Does it trade from a real address at which they can be contacted easily on a landline, or is it using a third-party or accommodation address and a mobile number? These things all add up to whether you feel comfortable about making payments by bank transfer - NEVER CASH! If things do go badly wrong, and you get judgement against the company, habing the bank details will also enable you to apply to the County Court for a Third Party Debt Order, which used to be called a "garnishee order" and freezes any funds held by that third party (the bank) so that they can be paid to you.

Finally, negotiate an adequate retention that will give the company an incentive to come back and fix any "snagging" problems that you find after completion... say, payment of the last 10% 14 days after completion. If I understand correctly what you are buying, water ingress won't be a relevant issue, so that should be long enough for you to check it over carefully and have a suitably qualified third-party tradesperson look at anything that gives you cause for concern.

Don't forget - there are lots of good quality products out there to purchase from honest, competent companies... the trick is to do your homework BEFORE handing over money, and to trust your instinct if something comes up that causes concern. Good luck!

Voyager2002

Forgetful46 wrote: »

I have read the article on Section 75, the fact that using PayPal results in not being covered AND I have read what cover PayPal offers, but I need some help.

I need to pay a company to erect a small wooden veranda/canopy at the side of my house. The terms are 30% upfront, 50% on delivery and the balance on completion.

Been there, lost money as a result.

My advice to you is simple: tell the company that you will pay by card, or pay when the job has been completed to your satisfaction, or find someone else. It is very easy for them to set up a merchant account to accept card payments. If they choose not to do this, take your business elsewhere.

Forgetful46

Apologies, maybe I am having a 'moment'. Why is it not worth finding out from PayPal whether they do indeed have a 'Commercial Entity Agreement' with the company? I believe then Section 75 would apply (or am I mistaken)?

More specifically, from what GraceCourt says, why is it that if they can only accept credit card payments via PayPal then "trying to establish S.75 rights is wasted effort"?

Thank you.

MiserlyMartin

Voyager2002 wrote: »

Been there, lost money as a result.

My advice to you is simple: tell the company that you will pay by card, or pay when the job has been completed to your satisfaction, or find someone else. It is very easy for them to set up a merchant account to accept card payments. If they choose not to do this, take your business elsewhere.

But you can't anymore. All card payments on eBay are automatically handled by Paypal and there is no opt out. Martins article needs updating!

This fact that it's automatic should mean the section 75 should apply to your credit card regardless. I argued with Santander that although it was a Paypal transaction it did not come out of my Paypal balance, only their card. They seemed to accept this and sent me a chargeback form.