Credit card liability - help please?

PiffleUK

Hi all
I just signed up today but have been using advice from this site for a year or so after a friend recommended me. So today I thought of you first when I ran into a problem I don't know how to deal with.

On June 1st this year I bought what claimed to be a full and genuine version of Photoshop on Ebay. I've never bought software on Ebay before but this time thought I'd done all the checks right. The guy was a powerseller, had good feedback, had a good story for his one negative feedback and if I hadn't been happy I had a seven day return option. So I went for it. I gave myself further backup by paying for it with a credit card linked to Paypal (or so I thought).

The software arrived, seemed the real deal, offset litho printed manual and inserts, all the stuff I'd expect. I activated and registered the product immediately and all seemed well so we payed off the credit card bill when it came.

It was some time before I found some problems irritating, namely that the keyboard shortcuts didn't always work. I got irritated enough to do a websearch and stumbled on an emerging hornets nest. There is a massive operation just coming to light which is flooding the market with high quality counterfeits of Adobe Photoshop and the ONLY thing to give them away is that some of the keyboard shortcuts don't work. I'm sure a lot of users don't even bother with that facility so won't even yet be aware that they're software is not the real deal. Once my suspicions were raised I checked with Adobe and my serial number is invalid, the activation and registration details I had sent on installation had gone to a dummy server giving the impression I had successfully installed genuine software.

Here's where the fun starts. Too much time had passed for me to be able to make a complaint to either Ebay or Paypal. My only hope was the credit card company so I wrote the following letter:

"Dear Ms A.

Re: Claim for fraudulent transaction on Beneficial Visa Card Number ****

On 1 June 2007 I purchased item ****** from Ebay for the sum of £202.85 GBP (see enclosure 1). Prior to purchase I had assurance from the seller that the product was as advertised a genuine ‘New and sealed Full Retail version’ of Adobe Photoshop CS2 (see enclosure 2). In addition the other feedback for similar products from this seller was all positive.

I installed the software and activated it and was unaware of the counterfeit until I read a thread on Adobe user to user forums on August 25 2007.

http://www.adobeforums.com/cgi-bin/webx?128@@.3bc40715

In this discussion several people came to the slow realisation that the problems we were having were due to a very convincing counterfeit version of Photoshop. I immediately contacted Adobe who confirmed that my serial number was not genuine and was invalid (see enclosure 3).

I checked the feedback for the seller and found that since I had bought my version one other person had reported that the software was counterfeit. I contacted him and he described the problems he had experienced in trying to get money back from the seller, including being accused of theft himself. The seller will not respond to any messages I send. I have reported the seller to Ebay and Adobe fraud department.

I am therefore making a claim under section 75 of the Consumer Credit Act 1974 on the grounds that the item I bought was misrepresented in claiming to be genuine software."

Today I have received a reply rejecting my claim as follows:

Thank you for your recent enquiry about the above merchant.

The credit card industry is governed by strict regulations which allow us as a card issuer, specified time limits in which to approach a merchant's bank in order to resolve a dispute on one of our cardholder's accounts.

Unfortunately, in this case, due to the time period that has elapsed between teh transaction and the date that we received your correspondence, we are unable, under Visa Regulations, to recover teh amount of the transaction from the merchant on your behalf. We advise customers to inform us of any disputed items within 30 days of the statement on which the transaction appears.

We have considered your claim for a refund, but regret to inform you that because you used Paypal to make your purchase, you do not have a valid claim against HFC (as the Creditor) under section 75 of the Consumer Credit Act 1974.

Section 75 of the Consumer Credit Act only applies to agreements involving 3 parties, namely a Debtor, a Creditor and a Supplier, where a Debtor has used the Creditors credit card to make a purchase from a Supplier.

For example a Debtor would be our cardholder, namely you. A Creditor would be HFC Bank as the credit card provider and the Supplier would be William Young.

A purchase made using Paypal adds another party to the transaction.

Section 75 of the Consumer Credit Act 1974 does not apply to transactions where there are either more or less parties involved than a Debtor, Creditor and a Supplier.

Based on the above facts, such a claim under Section S75 of the Consumer Credit Act is therefore not applicable. I can only suggest that you seek independent advice such as Trading Standards as to your rights of redress.

I'm confused on several points really. I know people who have claimed on their credit cards for goods not received that were payed via Paypal so I don't really understand them now saying that is an invalid claim.

I couldn't possibly have reported the dispute within the time limit the card allows because I wasn't aware of the fraud at that time, I still believed I had bought genuine software.

I'd be very grateful if anyone can get their head round this problem and give me any advice such as whether it is worth pursuing the credit card company or going to the financial ombudsman or anything? I have a real blind spot when it comes to this sort of thing and just look at the words feeling blank.

Regards
Kathy

jonesMUFCforever

Does it work without the shortcuts?
Why did it take you so long to find this out?
Is the powerseller still selling?
Have you informed Ebay?
Have you informed Paypal?

The real problem you have here is that you are out of time in claiming through Paypal and your credit card.
If the seller is UK based you could get their details and issue a small claims writ but this will cost you at least £30 in fees and there is no guarantee that you will get your money even if you win.

This is why I was asking if it worked without the shortcuts - if it does you may have to take it or leave it.
I see that this would cost you £160 through Amazon - you have paid a high price in more ways than one!

PiffleUK

Yes, the software works without shortcuts. It took a long time to find out because I went through the process of registration and activation online which made it appear that the software was legitimate. It's only later become apparent that the counterfeiters have set up a server to act as a false registration/activation centre. The shortcuts not working was a minor enough issue for me to think it was something wrong with my system until I checked online and found that others were starting to have the same problem.

The powerseller is still selling other items than software. I've informed Ebay who appear to only be making a token statement about being anti piracy. Paypal will not even open a dispute on a claim older than 45 days so there is no way to inform them.

The item you saw on Amazon at £160 will amost certainly be another counterfeit copy. There are thousands, maybe millions of them now flooding the market. Full price for CS3 which is now the current version is £500. I bought this believing I was buying a reduced price version because it was superceded by CS3's release, something many of the other people who bought the same software are saying was their thought process too.

I did call the Trading Standards people who told me that I am not out of time claiming on the credit card, whatever their letter says. I have at least six months. The issue of there being a fourth party in the deal seems to be the main one they can reject the claim on.

Whether or not it works without the shortcuts, it is still illegal to use it when it is not genuine software.

Trading Standards could only suggest the Financial Ombudsman which I shall try and get my head around tomorrow.

Thanks for taking the time to look through it with me.

Kathy

DesG

I believe their assertion that because there were more than three parties involved in the transacion implies loss of Section 75 coverage, is incorrect.

Paypal is merely the Merchant account provider of the seller.

The majority of CC transactions will always involve more than three parties as there will be a fourth party providing Merchant facilities for most businesses.

I would write back to the bank pointing this out, and if you have no luck proceed with a FOS complaint.

Cheers, Des.

jonesMUFCforever

So have you gone back to the original Ebay seller and told him that what he sold you was counterfeit and asked for your money back.

Also do you think that Amazon would sell illegal software??
I would certainly trust them over Ebay!

PiffleUK

Thanks Des, now you put it that way that makes perfect sense. Paypal is just like a bank in this sense isn't it.

PiffleUK

Sorry ejones, I didn't see your message. Yes, I've been back to the original Ebay seller and he won't reply to messages. I've also given his name and address to the Adobe Fraud investigation department.

Yes, I do think Amazon marketplace is similarly flooded with these counterfeits. I cannot emphasise enough that to the naked eye they appear absolutely genuine apart from one tiny identifying feature which is that they say 'made in Singapore' on the box. Most of the sellers are potentially unaware that they are counterfeits. Quite a few of the people on the Adobeforum thread about this bought their counterfeits from Amazon.com.

I agree though, complaints to Amazon are more likely to be responded to than complaints to Ebay. I had read their anti-piracy statements on Ebay and believed them but since heard that they make very little real attempt to stop traders of pirated goods.

Alfie_E

PiffleUK wrote: »

Thanks Des, now you put it that way that makes perfect sense. Paypal is just like a bank in this sense isn't it.

Unfortuantely, it’s a lot more complicated than that. The assertion of the credit card company that

Section 75 of the Consumer Credit Act 1974 does not apply to transactions where there are either more or less parties involved than a Debtor, Creditor and a Supplier.

is flat-out wrong. The Office of Fair Trading brought a test case covering, amongst other things, the situation where there is no direct contractual link between the card issuer and the supplier. The High Court found that section 75 applies to four-party transactions. This was upheld by the Court of Appeal in Office of Fair Trading v Lloyds TSB Bank plc and others [2006].

However, in that case, the four parties were the following.

• the cardholder (you)
• the merchant (the retailer)
• the card issuer (the bank that gave you the card)
• the merchant acquirer (the bank who act on behalf of the retailer)

The Consumer Credit Act 1974 was drafted at time when it was assumed there would be a buyer, a seller and a single entity between the buyer and the seller providing the credit. There would have been no separate card issuer and merchant acquirer. Would PayPal be classified as the merchant acquirer by a court? It may have just turned itself into a Luxembourg bank, but it wasn’t a bank at the time of your purchase. Is PayPal actually the merchant, as they would have been the legal owners of the bank account receiving the money?

I have no idea how many parties there are in your transaction. A key point that lead the High Court and the Court of Appeal to include four-party transactions was that the cardholder can’t possibly know how many parties are involved. It would be logical to extend this to your transaction, even if the card company were to argue that PayPal was a fifth party. What about all the other payment processors, such as WorldPay, Google Checkout and Amazon Payments? Is your card issuer going to take the same position and say that none of those are covered by section 75, as well?

It might be worth contacting Citizens Advice; they may have something definitive on their internal website that covers what I’ve written about.

PiffleUK wrote: »

I did call the Trading Standards people who told me that I am not out of time claiming on the credit card, whatever their letter says. I have at least six months.

That probably needs clarifying. You should have six years to bring action under section 75 of the Consumer Credit Act, from the time you noticed, or should have noticed, that there was a problem. Six months is the upper limit that Visa put on allowing a chargeback. It’s well established that PayPal are fully liable for chargebacks. If your card issuer have reduced that six month limit, that’s an extra restriction they have imposed.

PiffleUK

That's extremely helpful to know Alfie, I really appreciate your advice here. I think we're ready to at least reply to the bank now. I know the financial ombudsman website had said that the first response will always be a rejection and I can see how they might win a lot of cases just by people writing it off and not feeling up to pursuing it.

I'll keep you posted as to progress, thanks.