Does Section 75 applies to purchases through 3rd party devices ?

Nasqueron

Have you followed the normal complaints process in writing to the dealership etc? The card company aren't just going to give you money without seeing you have reached a point of not being able to progress any further.

Terry_Towelling

This is a bit more complex now. Did you pay for the warranty, erofus, or was it included for free, and was the warranty to be satisfied by the retailer? If you paid, you may have a chargeback right for the value of the warranty. That may not cover your costs but it is a start.

What follows is a bit of history and my opinion - stop reading if you aren't interested.

On the broader subject of S75 coverage can Eco-warrior advise whether his statement about online liabilities is based on legal opinion from within his card company, or on case-law? I ask because card company opinion has been challenged over the years and keeps changing. Back in the 1990's (when S75 awareness really started to take off), card company legal opinion was that there was no coverage for credit card transactions at all. That was challenged and thrown out.

Card companies then argued that only where the retailer's processing bank (Acquirer) and the cardholder's bank (Issuer) were the same was it possible to say the debtor-creditor-supplier chain was not broken and there were pre-existing arrangements covering the payment process, so S75 could apply. Where the Acquirer and Issuer were different banks and the payment process had to be intermediated or facilitated by Visa or MasterCard, that broke the debtor-creditor-supplier chain and S75 could not apply. That too was challenged and thrown.

Then we had banks refusing to honour claims on overseas transactions - that has been thrown out.

Now we have a situation where a retailer contracts with a third party to handle its card-based payments and the card companies are (seemingly) trying to say the retailer has no relationship with an Acquirer and therefore the debtor-creditor-supplier chain is again broken. I accept Eco Warrior's statement that this 'chain-breakage' only seems to be the case for online transactions but don't really understand why that distinction exists.

The likes of iZettle and PayPal are doing essentially the same facilitation or intermediation in the process as Visa and MasterCard. They have a contractual arrangement with an Acquirer to receive/send payments, they also have a contractual arrangement with a retailer to do this and so the chain is unbroken and everything is covered by pre-existing arrangements.

S75 surely has to apply (regardless of the payment environment) and it is probably only a matter of time before someone takes a case to court and the card companies are forced to climb down yet again.

eco_warrior

Terry_Towelling wrote: »

On the broader subject of S75 coverage can Eco-warrior advise whether his statement about online liabilities is based on legal opinion from within his card company, or on case-law?

Hi Terry


I know that we used to pay out on S75 claims for online PayPal transactions until FOS queried why we allowed such cases to reach them for adjudication. FOS would uphold/reject the customer complaints/claims on their merits but as we hadn't called out the lack of DCS link they wouldn't consider this during their decision.

Once we realised this we began to reject all S75 claims for PayPal and any referred to FOS have been rejected by them as well with the exception of just one.

FOS upheld a complaint as the PayPal transaction was Chip and Pin and it was determined that this type of payment went directly to the merchant (or their PayPal account).




Online transactions look like this = PayPal*(Merchant name)

But Chip and Pin transaction look like this = PP*(Merchant name)




So this allows us to distinguish between the two and those made in person meet the DCS link and then can be considered under S75 for Breach/Misrep.


I wonder if iZettle should be viewed in the same light.

Terry_Towelling

eco_warrior wrote: »

Online transactions look like this = PayPal*(Merchant name)
But Chip and Pin transaction look like this = PP*(Merchant name)

So this allows us to distinguish between the two and those made in person meet the DCS link and then can be considered under S75 for Breach/Misrep.

I wonder if iZettle should be viewed in the same light.

Thanks for this, Eco Warrior. I understand you may be using the merchant name distinction to identify the transaction environment - although I'm a bit surprised you aren't using the POS Indicator to do this. From memory (never a good idea) isn't POS Mode 90 CHIP read and POS Mode 05 Online?

Anyway, one of the things that has cropped up is the way PayPal (and presumably iZettle) are contracting with Merchants to process their transactions - online or otherwise. PayPal holds the relationship with the Acquirer (rather than the Merchant having to do this) and also contracts with the merchant to handle their card payments. The cardholder involved in any ensuing transaction has no relationship with PayPal at all and simply perceives themselves to be paying the retailer direct whether online or face-to-face.

It is my belief that inserting this type of contractual arrangement into the payment process amounts to pre-existing agreements and that PayPal's intermediation is no different to that of Visa/MasterCard and so the DCS link is effectively unbroken.

I don't see the situation as being any different whether it is card-present or card-not-present and the approach to liability should therefore be the same.

I suspect the Ombudsman's view is based on the 'old' PayPal model whereby cardholders funded an online wallet (of their own) in order to use that funding to pay for things with retailers. I would agree that that should not have S75 coverage because the funding of an online wallet held in the cardholder's own name is little more than a cash transaction that can subsequently be used to pay anyone for anything.

If I were to have S75 cover denied for an online transaction where PayPal/iZettle etc where acting solely for the retailer I would most definitely push it to court, if the Ombudsman were to apply their 'old model' logic to this 'new-model' scenario.

How do you feel about that sort of logic? - apart from 'Get lost, we have enough S75 losses as it is'. I know my dangerously whimsical thinking on S75 isn't to everyone's liking but I can't see why the differing POS environments should make a difference when the transaction chain is identical and it is the merchant's choice to use a third party to intermediate in the payment process.

I think banks are going to come unstuck pretty soon on this.

eco_warrior

Terry_Towelling wrote: »

Thanks for this, Eco Warrior. I understand you may be using the merchant name distinction to identify the transaction environment - although I'm a bit surprised you aren't using the POS Indicator to do this. From memory (never a good idea) isn't POS Mode 90 CHIP read and POS Mode 05 Online? .

I explained how the transaction shows on the statement so that anyone reading could understand the difference. The way the transaction is processed does cause the merchant name to show in a specific way in all the examples I have seen so far. I wouldn't say its going to be 100% accurate though, but its what made me ask the OP the question.

Online transactions are POS 81 while Chip and Pin is 05 and 90 is magnetic strip, I'm guessing these may have changed over time.

Terry_Towelling wrote: »

If I were to have S75 cover denied for an online transaction where PayPal/iZettle etc where acting solely for the retailer I would most definitely push it to court, if the Ombudsman were to apply their 'old model' logic to this 'new-model' scenario..

I would have thought someone may have already tried that but I don't actually know.

Terry_Towelling wrote: »

I can't see why the differing POS environments should make a difference when the transaction chain is identical and it is the merchant's choice to use a third party to intermediate in the payment process..

I just view it as a technicality or loophole. Which is why I often come on here to explain S75 isn't the holy grail some see it as.

Terry_Towelling wrote: »

I think banks are going to come unstuck pretty soon on this.

I can't say if you are right or wrong, I don't know of any cases that have went to court for this sort of thing. S75 claims being rejected due to being processed via PayPal are fairly commonplace in my experience.

Terry_Towelling

eco_warrior wrote: »

I explained how the transaction shows on the statement so that anyone reading could understand the difference.

Online transactions are POS 81 while Chip and Pin is 05 and 90 is magnetic strip, I'm guessing these may have changed over time.

I can't say if you are right or wrong, I don't know of any cases that have went to court for this sort of thing. S75 claims being rejected due to being processed via PayPal are fairly commonplace in my experience.

Thanks again, Eco Warrior. Apologies if I came across as prickly - didn't intend to.

Was just tucking into a piece of quiche when I remembered POS 05 was CHIP read and 90 was mag-stripe. I think I was also getting mixed up with the MO/TO/EC Indicator which has a value for online (or it used to).

I suspect (but again I am only guessing) that cases won't have gone to court because the historic 'Cardholder's-own-PayPal-account' model has become ingrained and the Ombudsman's view that may well be based on that historic model has deterred any action.

I guess I could contact the Ombudsman to seek clarification on the distinction between models and ask why they view CHIP transactions differently to online ones despite the payment chain being identical.

What occurs to me is that a cardholder could telephone a shop-based retailer who uses PayPal and make a transaction. That wouldn't be CHIP and PIN but a Telephone Order and presumably would still have the merchant name distinction you mention.

Would your bank honour a S75 claim in such a situation?

erofus

eco_warrior wrote: »

Hi Terry


Online transactions look like this = PayPal*(Merchant name)

But Chip and Pin transaction look like this = PP*(Merchant name)


I wonder if iZettle should be viewed in the same light.

Hi,
the transaction shows as : iZ* ABC (ABC being the name of the shop) and it was chip and pin. I am trying to get more info from the card issuer and will inform you of the outcome as soon as I have more.

erofus

good news! I think the credit card issues going to accept this now.
If they make compensation, would the seller / retailer get notified of this ?

[Deleted User]

If it's under section 7t, that will be up to the lender.

erofus

Deleted_User wrote: »

If it's under section 7t, that will be up to the lender.

7t ?
would I get notified at all or if they do, of seller's respond ?