Revealed: Section 75 credit card protection may fail due to payment processing

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Savvy shoppers who pay with a credit card in order to qualify for Section 75 protection if something goes wrong risk being left £1,000s out of pocket thanks to an obscure and little-understood exemption, a MoneySavingExpert.com investigation reveals....
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'Revealed: Section 75 credit card protection may fail due to payment processing loophole - shoppers beware'
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  • ask66
    ask66 Posts: 98 Forumite
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    This is a crazy situation. Many thanks to Martin & MSE for anything you are able to do to get some clarity.
  • Biggles
    Biggles Posts: 8,209 Forumite
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    They told us about this snag years ago, has something changed?
  • eskbanker
    eskbanker Posts: 31,451 Forumite
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    Biggles wrote: »
    They told us about this snag years ago, has something changed?
    To the best of my recollection they've consistently warned about PayPal in particular, where the consumer is choosing to use a (visibly) third-party payment provider, but this piece appears to be claiming that other card payment processors (WorldPay, Sage Pay, etc) routinely used 'internally' by businesses at their discretion could also negate s75 protection, which isn't an angle I remember seeing from them before. Happy to be proved wrong though!
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    eskbanker wrote: »
    To the best of my recollection they've consistently warned about PayPal in particular, where the consumer is choosing to use a (visibly) third-party payment provider, but this piece appears to be claiming that other card payment processors (WorldPay, Sage Pay, etc) routinely used 'internally' by businesses at their discretion could also negate s75 protection, which isn't an angle I remember seeing from them before. Happy to be proved wrong though!

    Yes, it's been raised as a theoretical risk before, on these boards I believe, though no examples have been quoted apart from PayPal.
  • Marchitiello
    Marchitiello Posts: 1,266 Forumite
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    I think third party payments operate similarly to PayPal , where the payment reach a third party. YoYo and the Tesco payment app are other examples (although Tesco uses to app to collect payments for their stores, so I guess it would have an hard time arguing to be a third party). WorldPay directly process Visa and MasterCard but I believe Amex transactions are sub-processed
  • Crabman
    Crabman Posts: 9,943 Forumite
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    edited 27 April 2017 at 10:25PM
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    This article suggests that the FOS is not fit for purpose - there is no feasible reason they could not publish guidance so there is transparency and consistency across cases.

    Customers of the FOS are in fact the financial firms who pay the "case fees" and nobody - Parliament or the Treasury - can touch them due to their "independence."

    Are there any formal qualifications to become a case assessor at the FOS?

    Imagine how embarrassing it would be for the FOS to have it revealed that two cases involving the same credit provider and payment processor resulted in different outcomes on the basis of the case-by-case assessment of the debtor-creditor-supplier link ;)
  • eskbanker
    eskbanker Posts: 31,451 Forumite
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    I'd have thought it's more the FCA's role to issue the clear guidance (in their regulatory capacity), which should then be used by FOS when resolving disputes, but it's a complex area, obviously not helped by a credit/payment/technology landscape that's a million miles away from where it was when the Consumer Credit Act became law in 1974!

    So, although I agree that there should be clearer guidance, I'm more horrified by "We also approached the Payment Systems Regulator about this issue, which told us to contact the Financial Conduct Authority (FCA). However, the FCA refused to give a statement"....
  • boliston
    boliston Posts: 3,012 Forumite
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    A lot of companies use card processors like sagepay to remain pci compliant as the rules are now so tight on compliance but from the customers point of view you are still paying the company directly as sagepay is not a "payment method" like paypal is, it is just a card processing company.
  • System
    System Posts: 178,102 Community Admin
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    Paypal can be either - I never leave mine in credit so that I can always avail myself of chargeback.

    The iZettle issue is a worrying development though.
  • Crabman
    Crabman Posts: 9,943 Forumite
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    Labsuper wrote: »
    The law is unclear and a grey area on this so the what legal guidance can they therefore give.

    Interesting - if the law is unclear/a grey area - on what basis is the FOS therefore adjudicating? What criteria are they using internally to arrive at decisions and why can't such guidelines simply be published for transparency?
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