Buying phones from abroad?

NFH

Usually credit card issuers can charge back any liability under Section 75 to the merchant, except in cases where the merchant has gone out of business. I wonder whether they can do this if the merchant is outside the UK and it is a breach of contract under UK law but not under the local country's laws.

grumbler

NFH wrote: »

Usually credit card issuers can charge back any liability under Section 75 to the merchant

I don't buy it.
Chargeback is an internal payment system procedure governed by the internal rules and reasons.
S75 is a unique UK law that can't override international payment system rules.
I don't think that a CC provider can charge back the supplier after, say, 5.5 years only because the CC provider is liable under the UK SoGA and CCA.

If a simple chargeback is applicable, then there is no reason for a 'heavy' S75 claim.

mobilejunkie

It's irrelevant. The credit card company is liable to the user whether they can recover from the retailer or not.

NFH

grumbler wrote: »

Chargeback is an internal payment system procedure governed by the internal rules and reasons.

Indeed, but I'm not referring to the standard chargeback procedure initiated by the customer. I'm referring to the card issuer taking separate action against the merchant through its own choice.

mobilejunkie wrote: »

It's irrelevant. The credit card company is liable to the user whether they can recover from the retailer or not.

You are right that this is irrelevant to the card holder's right to make a Section 75 claim, but I'm just curious to know whether a non-UK merchant can be hit with a loss as a result of a Section 75 claim. Imagine if you're a merchant in a jurisdiction with weak consumer rights, and a UK card holder buys something from you and claims up to 6 years later against the card issuer, and the card issuer then charges the transaction back to you.

grumbler

NFH wrote: »

Indeed, but I'm not referring to the standard chargeback procedure initiated by the customer.

It is the same procedure governed by the same rules. If there are no grounds for chargeback according to the rules, then the customer can resort to s75 claim, but in this case the CC company has no grounds for chargeback either.

NFH

grumbler wrote: »

It is the same procedure governed by the same rules. If there are no grounds for chargeback according to the rules, then the customer can resort to s75 claim, but in this case the CC company has no grounds for chargeback either.

My point is that the card holder might have a valid claim against the card issuer under a combination of Section 75 and other UK legislation, but if the merchant is outside the UK, then the card issuer might not be able to charge the loss back to the merchant. This would leave the card issuer out of pocket - not the card holder's problem but an unusual anomaly.

grumbler

NFH wrote: »

My point is that the card holder might have a valid claim against the card issuer under a combination of Section 75 and other UK legislation, but if the merchant is outside the UK, then the card issuer might not be able to charge the loss back to the merchant.

Yes, this is obvious if you mean charging the loss back by chargeback.
S75 claims and chargeback are absolutely independent and even for a UK purchase it is possible that the CC company pays to a customer, but has no grounds for a chargeback against the supplier (although can take legal actions instead).

This would leave the card issuer out of pocket - not the card holder's problem but an unusual anomaly.

It's a reality of S75 applied to CC transactions - what I called (to put it mildly) 'illogical' above. Pretty often more strong words are used, like 'stupid', 'absurd', etc.

mobilejunkie

It's not that stupid. The credit card company provides a service related to the purchase - in fact, to facilitate it. In return it earns a fee. That fee may be a lot less than its resulting liability but, like an insurance premium, is covered by volume of transactions and limited claims by number.

The banks fought hard against being liable for foreign transactions and lost. If they couldn't still make money they could withdraw the service. In the scheme of things, I am sure that what they actually pay out is a drop in the ocean compared to what they make from card fees.

I slso don't feel sorry for them; they have spent years inventing complicated ways to cream off more from their customers in obscure ways. I don't see why they had to fork out billions for PPI; I simply never allowed it be be added to my transactions in the first place. That cost is likely to be of a much higher order than this is.

grumbler

mobilejunkie wrote: »

It's not that stupid. The credit card company provides a service related to the purchase - in fact, to facilitate it.

And? When I go by a bus to buy a car, the bus company provides the service too to facilitate the purchase. So does a taxy or a train.

The fact remains that s75 is just a legal loophole that customers take advantage of. It was born long time ago when CCs didn't exist and for credits given specially to buy some specific goods that the lender knew about before giving the loan.
Later, when CCs emerged, it was just the imperfectnes of the original law that resulted in s75 applied to the CC purchases where the lender has absolutely no idea and has no control over where and what the credit is spent on. That's why there are so many exclusions from and legal arguments about s75 apllicability to CC purchases. E.g. the notorious Paypal in the middle that often just processes payments and essentially doesn't change anything for both parties, but is a typical legal excuse used by CC companies for denying s75 protection.

And if it's that natural and logical like you say, why is this law unique for UK?

In return it earns a fee. That fee may be a lot less than its resulting liability but, like an insurance premium, is covered by volume of transactions and limited claims by number.

Debit and prepaid cards earn a fee too. So do loans that are paid to current accounts, but often still can be traced to specific purchases.

And does it make any sense to you that one can pay £1 by a CC towards a £50K car to make the CC company jointly liable with the supplier for the full amount? I.e. £50K (plus possible consequential losses) for a few pence fee.

The banks fought hard against being liable for foreign transactions and lost.

Yes, but only because of the imperfect ambiguous law and legal formalities, not because there is some common sense behind s75 applied to CC transactions, especially abroad.

mobilejunkie

I didn't say it was logical or natural. Like much English Law, it may be neither. It simply IS, however - logical and/or natural or not

The transport analogy is completely misplaced: the provider has no liabilty or control over what a passenger does at the end of the journey, so their responsibility ends there. The credit card, however, can only be used at this point to complete the transactions AND, in fact, the provider DOES have control of it - they don't have to authorise it.

You mention loans. They DO make the provider liable under section 75 if taken out at the point of sale to facilitate the purchase. I should know I've sold enough of them AND, like the credit cards, it is used as a very strong selling point for buying on credit.