Section 75 and Worldpay

arthurfowler

Hi there. I read a lot recently about what is covered under section 75 and I know there is a loophole when purchasing through a merchant such as PayPal etc. 

I have just purchased a hotel through the hotels own site but over the phone (I am told they used worldpay). I am not sure if they are classed as a third party or not. The credit card statement has the name of the actual company I booked through. Is that enough to cover me?

I do also have travel insurance. If anything happens, am I covered by travel insurance anyway? 

I've never booked outside of the big players before (expedia, etc), so just want to be reassured I would be covered if the company for some reason goes bust etc. I see no reason why this should happen, just being cautious. 

eskbanker

arthurfowler said:

Hi there. I read a lot recently about what is covered under section 75 and I know there is a loophole when purchasing through a merchant such as PayPal etc. 

I have just purchased a hotel through the hotels own site but over the phone (I am told they used worldpay). I am not sure if they are classed as a third party or not. The credit card statement has the name of the actual company I booked through. Is that enough to cover me?

A payment processor such as WorldPay is actually a fourth party over and above the three parties who must be linked directly in order to enjoy s75 protection, i.e. debtor (you), creditor (card company) and supplier (hotel).  However, where that payment processor is contracted by the supplier (as here) then this doesn't negate s75, unlike the PayPal scenario where the customer chooses to use them.

arthurfowler said:

I do also have travel insurance. If anything happens, am I covered by travel insurance anyway?

Not for anything - one thing the coronavirus crisis has demonstrated is that travel insurance isn't the universal panacea some believed it to be, so you need to study terms carefully to ensure that it covers you against the specific risks you want it to.

Sandtree

eskbanker said:
unlike the PayPal scenario where the customer chooses to use them.

Some businesses only accept PayPal and so its not always a case of "the customer chooses to use them" but that doesnt change the supply chain and suddenly reinstate S75. Also some use PayPal as a pure merchant acquiring service in which case S75 does still apply.

Its a complex issue as with https://www.moneysavingexpert.com/news/2017/04/revealed-section-75-credit-card-protection-may-fail-due-to-payment-processing-loophole---shoppers-beware/ and iZettle saying their service doesnt stop S75 however a claim having had to go to FOS as AmEx stated it did... unfortunately cannot find the outcome of it or another similar story where another bank claimed iZettle broke the chain.

Mc228

World pay should not affect Section 75. Nor should Square, Sumup or Izettle.
I am currently going through a S75 claim that my CC company rejected on the grounds that a third party payment processor was used. They have been proven wrong on multiple fronts but are still fighting. The FOS investigator has made their final decision in my favour, still waiting for the CC company to reject / accept. I will be making a detailed post when it is all finished but it has been 1 year and 4 months so far since the initial purchase.

Essentially creditors seem to believe that you are making a purchase of electronic money by using izettle/sumup/square but it is clear that at no point is electronic money purchased as the funds do not meet the FCA description of electronic money.

Interestingly, I think Paypal is a bit different because in at least some cases the supplier will receive electronic money into their Paypal account. The reason why S75 still stands in this case is because the supplier will have a commercial entity agreement with Paypal which means that the d-c-s link is still intact. As evidenced in this recent ombudsman decision:
https://www.financial-ombudsman.org.uk/files/276994/DRN6549251.pdf

As long as you don't explicitly purchase funds in your paypal account using your credit card before transferring those funds to the supplier I believe you should be covered. Not that this applies in your case but it may be useful to someone else.