S75 When is a gift not a gift and why does it matter?

Terry_Towelling

Wondered whether to try and pull opinions on gifts together in a thread. For the purpose of the thread I will be ignoring Chargeback rights and assuming all purchases are over £100, under £30K and made on a credit card by the main cardholder.

If I buy something for someone else and it is sent directly to them, is that a gift? Probably, yes.

If I buy something and take possession of it before I give it away is that a gift? Probably, yes.

If I buy something intending to give it as a gift but cannot because it is, say, faulty, is that a gift? Probably, not.

If I buy my partner an engagement ring, is that a gift, or is it still mine but I am allowing them to wear it as a symbol of our impending union? Don't know.

If I have given something as a gift and it is given back to me because it is, say, faulty, do I have my rights under S75 restored as the owner, or is that a separate issue? Don't know.

So, why does it matter anyway?

I hear the arguments about the DCS chain but there is surely no breakage in that chain. I am still the debtor, my card company is still the creditor and the shop is still the supplier. Everything has been done in accordance with pre-existing arrangements between those parties. The only thing is, it's not me (the debtor) who has a problem with the goods; it is the recipient. So I don't have a claim against the supplier and therefore neither do I have a claim against the creditor.

I also keep coming back to the so-called 'beneficiary test'. Who is the beneficiary of the contract to supply? So, maybe, the test is actually related to the value that I as the debtor expect to receive in return for becoming indebted.

If I expect to benefit from my outlay and that doesn't happen because of a contractual issue with the supplier, I have a claim because I am worse off as a result - I have nothing of value and I have a debt which I otherwise wouldn't have had.

If I don't expect to benefit from my debt (as it was a gift), I don't have a claim because having the debt and nothing of value in return was always my intention and I am therefore not worse off as a result.

Anyone got any comments? Anyone agree or disagree?

18cc

I have been reading the other threads and it seems that if person A buys something (eg a car) using their CC but the purchase receipt is in the name of person B (eg a daughter) then section 75 does not apply.

It would be better if the purchase receipt was in the name of person A 9the cardholder) even if they subsequently gave the item (car) away as a gift.

I am surprised by this as we are talking about CREDIT cards here and the law on credit agreements is quite strong (not that I am an expert). I would have though that is you paid for something on credit you would be protected no matter who the eventual owner of the goods was.

eco_warrior

Terry_Towelling wrote: »

Wondered whether to try and pull opinions on gifts together in a thread. For the purpose of the thread I will be ignoring Chargeback rights and assuming all purchases are over £100, under £30K and made on a credit card by the main cardholder.

If I buy something for someone else and it is sent directly to them, is that a gift? Probably, yes.

If I buy something and take possession of it before I give it away is that a gift? Probably, yes.

If I buy something intending to give it as a gift but cannot because it is, say, faulty, is that a gift? Probably, not.

If I buy my partner an engagement ring, is that a gift, or is it still mine but I am allowing them to wear it as a symbol of our impending union? Don't know.

If I have given something as a gift and it is given back to me because it is, say, faulty, do I have my rights under S75 restored as the owner, or is that a separate issue? Don't know.

So, why does it matter anyway?

I hear the arguments about the DCS chain but there is surely no breakage in that chain. I am still the debtor, my card company is still the creditor and the shop is still the supplier. Everything has been done in accordance with pre-existing arrangements between those parties. The only thing is, it's not me (the debtor) who has a problem with the goods; it is the recipient. So I don't have a claim against the supplier and therefore neither do I have a claim against the creditor.

I also keep coming back to the so-called 'beneficiary test'. Who is the beneficiary of the contract to supply? So, maybe, the test is actually related to the value that I as the debtor expect to receive in return for becoming indebted.

If I expect to benefit from my outlay and that doesn't happen because of a contractual issue with the supplier, I have a claim because I am worse off as a result - I have nothing of value and I have a debt which I otherwise wouldn't have had.

If I don't expect to benefit from my debt (as it was a gift), I don't have a claim because having the debt and nothing of value in return was always my intention and I am therefore not worse off as a result.

Anyone got any comments? Anyone agree or disagree?

Lots of points and questions raised TT

As I said in the car gift threads, the main issue (in my view/experience) with gifts is the contract not being in the cardholders name. Meaning any breach of contract (can be / or is) viewed as being between the owner of the goods (as per the contract) and the supplier, which takes the cardholder out of the equation.

I follow your point about the cardholder still being the debtor as they have the actual debt for the purchase. However the issue of the contract is the sticking point.

In my view "joint benefits" kicks in when the cardholder uses or receives the benefits (for lack of a better term) of the purchase:

- Holidays (if the cardholder is part of the group travelling)
- Car (if the cardholder will share use of the car - which is why the bank may ask for proof they are insured for the vehicle)
- Home Improvements (if the cardholder lives within the property)

I think you could argue that an engagement ring could match these examples in terms of joint benefit.

18cc

Have also just read something else I didn't know - a secondary cardholder can't claim S75 unless the item bought was also for the benefit of the primary cardholder.

So if husband was the primary cardholder and wife the secondary, and she went out and bought a faulty dress then she couldn't claim S75 unless she could show... oh let's not go there.

eco_warrior

18cc wrote: »

Have also just read something else I didn't know - a secondary cardholder can't claim S75 unless the item bought was also for the benefit of the primary cardholder.

So if husband was the primary cardholder and wife the secondary, and she went out and bought a faulty dress then she couldn't claim S75 unless she could show... oh let's not go there.

Yes this would usually be the case as well

Terry_Towelling

18cc wrote: »

Have also just read something else I didn't know - a secondary cardholder can't claim S75 unless the item bought was also for the benefit of the primary cardholder.

So if husband was the primary cardholder and wife the secondary, and she went out and bought a faulty dress then she couldn't claim S75 unless she could show... oh let's not go there.

Even this has been the subject of debate. Some resources say no secondary cardholder purchases qualify for S75 cover because the secondary cardholder has not signed a credit agreement with the card company and therefore cannot be classed as the debtor. Some suggest when a secondary cardholder buys something for the main cardholder AND also at the express request of the main cardholder, S75 will apply.

However, No one can find anything to really back up those arguments (so far). Everything seems to be opinion and may never have been tested in court. Even the ombudsman's view is only opinion - although I'd like to hope it is well-informed opinion.

Without clarity, the card companies can effectively mimic each others stances (collusion?) on this sort of thing and the danger is that consumers will end up believing they are right when they might not be.

I've noted in other threads that card companies have changed their views many times over the years (as has the ombudsman) after court actions produced verdicts that conflicted with their 'opinions'.

Terry_Towelling

eco_warrior wrote: »

Lots of points and questions raised TT

Sorry - I know I write too much - it's a throw back to a previous job (in cards) when I tried to leave bits out to shorten the text and people would always jump on me for having missed something.

eco_warrior

Terry_Towelling wrote: »

Sorry - I know I write too much - it's a throw back to a previous job (in cards) when I tried to leave bits out to shorten the text and people would always jump on me for having missed something.

It wasn't a criticism Terry

Its a good thread to start, i'm all for debate and increasing awareness.

phillw

18cc wrote: »

I am surprised by this as we are talking about CREDIT cards here and the law on credit agreements is quite strong (not that I am an expert). I would have though that is you paid for something on credit you would be protected no matter who the eventual owner of the goods was.

The law was originally devised for companies that sold things directly with credit terms.

There was a lot of scammers that signed you up for the credit terms and then either didn't deliver the goods or delivered sub standard goods, but forced you to pay for them.

Normally you enter a three way contract to provide goods, if the goods are to be supplied to a third party then I can see why it wouldn't be covered.

Terry_Towelling

phillw wrote: »

The law was originally devised for companies that sold things directly with credit terms.

There was a lot of scammers that signed you up for the credit terms and then either didn't deliver the goods or delivered sub standard goods, but forced you to pay for them.

I remember the early days with card companies believing they had no connected-lender-liability because they believed the act was there to stop dodgy companies selling rubbish using their own in-house finance company.

The trick was to have two closely allied companies - one selling rubbish and one selling loans to buy the rubbish. At the point the excrement hit the fan the supplying company would declare itself bankrupt to avoid any liability for their rubbish but the finance company would continue to trade and demand repayment of the loans.

Making the loan company equally liable for the sins of the closely-connected supplying company was designed to stop that and credit card companies were caught by accident.