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

br1anstorm

I have just read the MSE article which has prompted this discussion thread, following an experience I have just had which involved a payment processing company.

Full details are at this separate thread .

I'm posting here because there is clearly a wider issue still unresolved.

Most of the discussion in this thread has focused on the Section 75 legislation and the role of PayPal, the largest and best known "payment processor".

I would like to see an analysis or explanation of the status and activities of other companies which seem to play a similar "third-party" role in transactions between customer, credit card company, and retailer/supplier.

The two other firms which seem to be well-known and widely-used, at least in UK, are WorldPay and SagePay. My recent experience was with another firm apparently more extensively used in other EU countries and in the US, called Skrill.

The aspect (one of several) that seems ill-defined and poorly regulated is the activity of these companies in the "verification" process when a customer seeks to make an online order from a supplier/retailer. Usually the verification process (at least for Visa and Mastercard) involves completing an additional form or screen during the checkout process with personal ID information such as date of birth. That seems fairly straightforward. Usually the WorldPay or SagePay logo appears during the checkout process.

My experience recently was a little different. The verification process - for a purchase valued at 36 euros - involved the German retailer triggering a request to my card company (NatWest Visa) for a one-time SMS or telephoned code which the retailer would then use to process the payment. Again, that seemed straightforward. But it didn't work: the transaction/payment failed.

It emerged (a) that the retailer was using a payment-processing intermediary called Skrill, to process the transaction; and that (b) the authorisation request to NatWest Visa was transmitted by Skrill, who sought authorisation for a payment from Visa of 200 Euros, not the 36 Euros of the purchase!

This rang alarm bells with both NatWest Visa and with me when I discovered this. Nevertheless when I provided details of the order, and the retailer, to NatWest Visa on the phone, they told me the transaction could go ahead. However the retailer still could not complete the card payment. So we agreed to cancel the order.

I then phoned NatWestVisa's security team to advise them that the order had been cancelled and would not be pursued, and I asked them to take the precaution of blocking my card account. At that point they told me that there had been numerous charges (each of 200 Euros) already made against my account with Skrill as the payee!

We are assuming that this is a system problem or inefficiency (a charge generated against my account each time the retailer tried - and failed - to process the payment), rather than a deliberate attempt by Skrill to defraud me. NatWest Visa have subsequently said that they will "return" to my account the funds supposedly charged by, or paid out to, Skrill.

But I am still concerned that a process, and a firm, whose function was to "verify" my card in order to enable payment to a retailer, and with which I had no direct contact, has apparently itself sought, and may have been paid, amounts by NatWestVisa considerably greater than the value of my intended order.

The only vaguely similar practice that I have heard of is that of some car rental companies who place a holding or pending charge against a credit card account until the actual eventual hire-charge is calculated and debited (and the 'holding amount' is then released).

But this is a somewhat different set of circumstances. No order has been placed or confirmed, and no goods have been supplied. The behaviour of Skrill (whether as verifier or as processor of the card payment) does seem to be questionable. Hence my interest in clarifying whether (if any money is indeed taken from my account) I have Section 75 protection or the basis to request chargeback.

robbo87

I'm buying a product (purchase&install windows) from a tradesman. I'd like to use ccard but he doesn't take them. He does take paypal. So I could use the ccard to pay that account. Quite possibly its a personal account. Btw I'm content to pay him and think the work will likely prove to be good...but, just in case, eg he's not about in a year or two.. Section75 protection would be nice.

However..

I've read that involving paypal as a 'payment processor' for a ccard transaction may/will negate Section75 ccard rights. I've also read using my Paypal Credit gives Section75 rights.  

So,

if I use my Paypal Credit to pay  more than £100 and my normal ccard to pay the balance, am I covered for a Section75 claim to Paypal Credit for 100% of the entire transaction even if the ccard Section75 claim fails? 

Any thoughts?

[Deleted User]

robbo87 said:

I'm buying a product (purchase&install windows) from a tradesman. I'd like to use ccard but he doesn't take them. He does take paypal. So I could use the ccard to pay that account. Quite possibly its a personal account. Btw I'm content to pay him and think the work will likely prove to be good...but, just in case, eg he's not about in a year or two.. Section75 protection would be nice.

However..

I've read that involving paypal as a 'payment processor' for a ccard transaction may/will negate Section75 ccard rights. I've also read using my Paypal Credit gives Section75 rights.  

So,

if I use my Paypal Credit to pay  more than £100 and my normal ccard to pay the balance, am I covered for a Section75 claim to Paypal Credit for 100% of the entire transaction even if the ccard Section75 claim fails? 

Any thoughts?

No and this topic is well covered on the MSE page for S75 - if you pay via a third party like paypal you do not have S75 protection

petepool

Just had AMEX tell me that my transaction via Amazon Marketplace doesn't qualify for S75 protection as the link with the supplier was broken. Intend to challenge this especially as I'm claiming for faulty goods under a warranty. Found the MSE guide very useful as ever

eskbanker

petepool said:

Just had AMEX tell me that my transaction via Amazon Marketplace doesn't qualify for S75 protection as the link with the supplier was broken. Intend to challenge this especially as I'm claiming for faulty goods under a warranty. Found the MSE guide very useful as ever

https://www.moneysavingexpert.com/credit-cards/PayPal-Section75/#doesntwork highlights this issue....

eric77

AMEX has just denied a Section 75 claim from me, because while I believed I was simply buying from a UK website using a UK Credit Card, Amex claims the merchant used the services of a payment processing provider called Adyen (and for that reason they are denying my S75 claim).  I am challenging this.  Has anyone else had any recent experience here?  

rossyl123

I have the exact same scenario as 'Nick' in this article.

If anyone can confirm the outcome of Nick's case (I'm the ORIGINAL article) after it was referred to the Financial Ombudsman Service. 

Amex have rejected my claim, as I paid via Chip and Pin on a iZettle card device. 

This seems crazy. Unpaid using my credit card, chip and pin, and my claim has been rejected due to payment being made via iZettle. 

grumbler

rossyl123 said:

This seems crazy.

No, it doesn't. S75 is nonsensical. So can be any formal excuses that CC providers use when trying to avoid it.

eric77

rossyl123 said:

I have the exact same scenario as 'Nick' in this article.

If anyone can confirm the outcome of Nick's case (I'm the ORIGINAL article) after it was referred to the Financial Ombudsman Service. 

Amex have rejected my claim, as I paid via Chip and Pin on a iZettle card device. 

This seems crazy. Unpaid using my credit card, chip and pin, and my claim has been rejected due to payment being made via iZettle. 

Hi rossyl123.  There's lots of case law that explains that a credit card provider cannot legitimately refuse a S75 claim simply because of the use of a payment processing company (e.g. the Court of Appeal case of the Office of Fair Trading v Lloyds & others [2006]; the High Court case of Governor and Company of the Bank of Scotland v Alfred Truman (a firm) [2005] EWHC 583).  FOS are aware of this and so should make their decisions accordingly (e.g. look at the FOS database decision reference DRN9563925).

In my own case, I flagged all of this to the credit card company in my S75 claim.  They rejected the claim.  I raised a complaint, using the same information.  They rejected the complaint.  I raised the issue with FOS, using the same information.  I sat in a queue with FOS for (I think) 3 months.  As soon as FOS assigned their claims handler, the credit card company agreed to pay up in full (without the FOS claims handler doing any investigation).  I don't think the credit card companies want further FOS findings against them, but will push the issue until then.

P.S.  This is all based on the 'middle' company being only a payment processor.  If you have an account with that middle company (and money went in and out of your account) then it does work differently, I understand.  So for example, some Paypal transactions go through your own Paypal account (so S75 does not apply) some do not (so S75 does apply).  Enjoy!

rossyl123

eric77 said:

rossyl123 said:

I have the exact same scenario as 'Nick' in this article.

If anyone can confirm the outcome of Nick's case (I'm the ORIGINAL article) after it was referred to the Financial Ombudsman Service. 

Amex have rejected my claim, as I paid via Chip and Pin on a iZettle card device. 

This seems crazy. Unpaid using my credit card, chip and pin, and my claim has been rejected due to payment being made via iZettle. 

Hi rossyl123.  There's lots of case law that explains that a credit card provider cannot legitimately refuse a S75 claim simply because of the use of a payment processing company (e.g. the Court of Appeal case of the Office of Fair Trading v Lloyds & others [2006]; the High Court case of Governor and Company of the Bank of Scotland v Alfred Truman (a firm) [2005] EWHC 583).  FOS are aware of this and so should make their decisions accordingly (e.g. look at the FOS database decision reference DRN9563925).

In my own case, I flagged all of this to the credit card company in my S75 claim.  They rejected the claim.  I raised a complaint, using the same information.  They rejected the complaint.  I raised the issue with FOS, using the same information.  I sat in a queue with FOS for (I think) 3 months.  As soon as FOS assigned their claims handler, the credit card company agreed to pay up in full (without the FOS claims handler doing any investigation).  I don't think the credit card companies want further FOS findings against them, but will push the issue until then.

P.S.  This is all based on the 'middle' company being only a payment processor.  If you have an account with that middle company (and money went in and out of your account) then it does work differently, I understand.  So for example, some Paypal transactions go through your own Paypal account (so S75 does not apply) some do not (so S75 does apply).  Enjoy!

You are a HERO!!

Thank you.