Credit card surcharge - unsure best way to handle?

LimaAlphaHotel

I am in a bit of a quandary over how to handle this situation (presuming I am right regarding my rights and the law) and am hoping I might be able to crowd-source some friendly advice here.

I am looking for a used car, I have found one that looks likely to be exactly what I am looking for at an independent dealer but it is a long way from me so I have paid a reservation fee on my credit card (which is relevant to my problem) for them to hold it until I can visit on Saturday to test drive/inspect the vehicle and make a decision on buying it.

During the telephone conversation I asked about payment methods and said I would like to pay on a credit card (0% on purchases and cash-back if I spend over £100 in the first 60 days is going to work out well for me here ) and I was told that was fine but they would charge me 2% or 2.5% (I forget which) or I can pay by debit card with no surcharge.

Now, I know this (surcharging for credit cards c.f. debit cards when both are accepted) is illegal and has been since 2018.  I also know from the internet (I had to remove the link because I am new here but GoCardless have a good article entitled "Is it Legal to Set Minimum Card Payment Limits?" that I found via Google) that Visa and MasterCard prohibit (but poorly enforce) merchants from setting minimum and maximum transaction values.  By taking my deposit by credit card they can't now pretend to me that they don't take credit cards (they don't take AmEx at all, for example, which they are perfectly entitled to do).

In short, on a legal/contractural footing everything seems to say I should be able to pay on credit card and it not cost me more than paying by debit card, however since they are openly saying they still surcharge for credit cards in October 2021 I am not sure they are going to care what the rules are...

Obviously the first thing to do is to politely discuss this when I got to look at the car but I am worried about how to handle the situation if I want to buy the car and they won't back down on this?  Or if they simply refuse to sell me the car because I want to pay by credit instead of debit card?  (I don't think I have any route of redress in the latter case, since they are not discriminating based on a protected characteristic they can legitimately refuse to sell to me with or without a reason.)

In these cases I think my options are:

1. Walk away on principal (and complain to their local trading standards office), however I have looked hard and finding the exact spec of car at the right price for me is not proving easy

2. Pay the charge then complain to trading standards/pursue it through the courts (since the legislation expressly suggests this route for consumers who are illegally charged for using a credit card), but that seems like a nasty thing to do to the business

3. Pay the charge and keep quiet(ly seething) - I get the car but am out of pocket by £100s that I shouldn't have been charged

I do appreciate that the business will pay more for processing a credit card payment but this has been the law for over 3 years, if they are going to accept credit card payments (at all) then I think they should have built it into their business model by now (i.e. spread the cost of being a business that gives the option of paying by credit card into their margins/the advertised prices - which was kinda the point of the legislation, that consumers pay the price advertised via any card payment method accepted by the business).

I guess my question is, how would you (reading this) handle it if the business insist on surcharging?

Manxman_in_exile

I'm no expert in this area, but so long as you paid the deposit by credit card, aren't you covered by s75 protection in respect of the whole purchase anyway?  Then pay the balance by debit card.

However, I'm confused as to whether you have actually paid a deposit by credit card or not.  On the one hand you call it a "deposit", but on the other you describe it as "a reservation fee" for the dealer to hold the car to allow you to view it*.  Could you be a bit clearer as to what has actually happened?

If you end up paying extra I'd complain to your CC company.



*I'm assuming that a reservation fee is not refundable - you are paying the dealer to stop him selling it to someone before you - and would not necessarily qualify as a deposit on the purchase price.

Aylesbury_Duck

They can of course just simply refuse to allow you to use your credit card at all for the purchase, so if you want to put a deposit on the card at least (and that would be sensible, even if you only put £100 on the credit card), I wouldn't be going in all guns blazing on the law and your rights.

Note Maxman's point about the difference between a reservation fee and a deposit.  I would think you need to put at least £100 of the actual purchase on the card for you to get section 75 protection, I doubt the reservation fee qualifies.

[Deleted User]

Any amount - even a penny - on the card will give s75 protection, as long as the car costs more than £100 and less than £30k.

Undervalued

Deleted_User said:

Any amount - even a penny - on the card will give s75 protection, as long as the car costs more than £100 and less than £30k.

Indeed but as A_D has said they can refuse to accept the credit card (and the debit card too) if they so wish.

I also think it would be easy for the dealer to argue that the amount you have paid so far is not a deposit. If it were a deposit then I think you would need to have committed to buy the car, which as I understand it is not the case at the moment?

As I see it you have paid a fee to compensate them for the inconvenience of taking the car off the market until you look at it. If it were a deposit and you pulled out of buying the car without a valid reason, they could look to you for their actual losses (which may be more than deposit under some circumstances). I imagine you don't think you have committed to that?

[Deleted User]

As long as the amount paid forms part of the final price of the car, which is normally the case, then s75 will apply. Only if it was an additional charge and specifically for the reservation would it not apply.

Obviously if the OP doesn't go on to buy the card, then it's purely a reservation fee and almost certainly non-refundable.

Flight3287462

They do not want to take payment via a credit card, either pay by bank transfer or debit card.

LimaAlphaHotel

Thanks everyone for your feedback so far.

RE: deposit vs reservation fee, I'm unclear on that myself.  I've been told even if choose not to buy the car I will get it back in full, if I buy the car it comes off the purchase price (so a deposit?).  I think it's just to ensure I show up to have a look, presumably if I was a no-show to look at it at the agreed time they would keep it.  I guess for the purpose of s27 it would depend on how that payment was shown on the final invoice?

However, I'm less interested in the s27 protection, my goal is to buy using credit (but obviously having it is a good thing).  Using a debit card or bank transfer isn't an option for me, financially - using the credit card will allow me to spread the cost over the interest-free purchase period (18 months), and is my preferred (cheapest) option for obtaining credit to pay for the car.

I understand they don't want to take credit card but they way they are going about that is illegal under The Consumer Rights (Payment Surcharges) Regulations 2012 (as of 13 January 2018) and I *really* want to pay that way without being penalised compared to a debit card.

debsy42

When we bought our car the dealer asked how did I want to pay, when I suggested credit card I was told that was fine. I did enquire about credit card charges and was told they weren't allowed to charge fees any longer for credit card payments. Like yourself we wanted the protection of paying this way but not the extra £300+ fees.

Manxman_in_exile

If you want to buy a used car on your CC to take advantage of free credit, then you are bonkers to even consider buying from an independent dealer who is "a long way from you" and who doesn't accept CC payments.

You only need to read a few threads on here to realise that buying a used car from a dealer who is "a long way from you" is rarely a good idea on its own - especially if it goes wrong and you haven't much money to play with.

Can't you find a decent car locally from someone who will take a CC?

Manxman_in_exile

If you want to buy a used car on your CC to take advantage of free credit, then you are bonkers to even consider buying from an independent dealer who is "a long way from you" and who doesn't accept CC payments.

You only need to read a few threads on here to realise that buying a used car from a dealer who is "a long way from you" is rarely a good idea on its own - especially if it goes wrong and you haven't much money to play with.

Can't you find a decent car locally from someone who will take a CC?