Successful claims under sect 75 of the consumer credit act 1974 - are these legally binding?
charlcombe007
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Newbie
I was successful with a chargeback with my credit card company in May 2020. This was for a holiday in March 2020 which was curtailed.
In Oct 2021 - 18 months later - the holiday company has sent me an invoice for the amount of the chargeback stating that I was not entitled to a refund and I should make a claim through my insurer.
In responding I pointed out that they had been given 45 days to challenge the chargeback made in May 2020 under Mastercard's regulations. They did not do this and so the chargeback was successful and the refund permanently recovered.
They have since responded saying they did challenge the chargeback but were unsuccessful. However, this is not a legally binding decision and they were still within they rights to request payment through the courts if they felt the chargeback was unjust.
They go on to say that in accordance with the package Travel Regulations, I am not entitled to a refund from from them. However that is not to say that I cannot make a claim through my travel insurer. They are aware of many successful claims made by other customers in similar circumstances.
Can they holiday company request payment through the courts even though the chargeback was successful and the refund permanently recovered?
In Oct 2021 - 18 months later - the holiday company has sent me an invoice for the amount of the chargeback stating that I was not entitled to a refund and I should make a claim through my insurer.
In responding I pointed out that they had been given 45 days to challenge the chargeback made in May 2020 under Mastercard's regulations. They did not do this and so the chargeback was successful and the refund permanently recovered.
They have since responded saying they did challenge the chargeback but were unsuccessful. However, this is not a legally binding decision and they were still within they rights to request payment through the courts if they felt the chargeback was unjust.
They go on to say that in accordance with the package Travel Regulations, I am not entitled to a refund from from them. However that is not to say that I cannot make a claim through my travel insurer. They are aware of many successful claims made by other customers in similar circumstances.
Can they holiday company request payment through the courts even though the chargeback was successful and the refund permanently recovered?
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They do not have the right to do this via your card issuer as this has timed out, but as many who fraudulently claimed back from Ryanair are now finding, the money is still owed. I would welcome a matter similar to this matter going to court for clarity on the situation, but before it gets to that stage, lets see if we can use the legislation and any known legal judgements (although many of these won't be directly in relation to Covid) to help you.
Can you give us a bit more information regarding the curtailment, including where you were going, what happened and when? Exact dates will be very important in this due to it being in March 2020 and the many rapid changes around this time. With this information, we can assist in formulating an argument. We'll also need to know whether it was a package or flight/hotel booked separately (it does sound like a package, but this could also be a linked travel arrangement from your wording) and what was cancelled, when and by who, as this will significantly affect your legal rights.
I can spell, my iPad can't.
But you actually had a chargeback processed, not a s75 claim, which means the funds are taken from the merchant, so they can seek repayment if the money is still owed.
S75 would have been the card issuer reimbursing you from their own funds as a party to the matter (which they may attempt to reclaim from the agent), where this was a chargeback, meaning the money of the card issuer never came into this.
I can spell, my iPad can't.
But a chargeback is effectively just a reversal of the transaction giving you the money back. It is not a legal judgement. If you were not entitled to the refund as per your T&C's with the holiday company then they are entitled to ask for the money.
MSE has the following which explain what Section 75 and chargeback are:
Section 75 refunds: credit card protection’ - MSE (moneysavingexpert.com)
Debit & credit card chargeback: protection on faulty goods - MSE (moneysavingexpert.com)
https://www.gov.uk/government/publications/cma-to-investigate-concerns-about-cancellation-policies-during-the-coronavirus-covid-19-pandemic/the-coronavirus-covid-19-pandemic-consumer-contracts-cancellation-and-refunds
In some circumstances, due to lockdown laws, a contract cannot go ahead as agreed or at all, and is therefore ‘frustrated’. A contract will be frustrated as a matter of law if, due to no fault of the parties, something happens after the contract was entered into which means it can no longer be performed at all or performance would be radically different to what was agreed.
As a result, the contract comes to an end and, where consumers have paid money in advance for services or goods that they have yet to receive, they will generally be entitled to obtain a refund.
There is currently some question about this advice, but clearly following the advice that the government published at the time cannot be considered "fraud".
There are some cases going on at the moment, so it is probably best to wait to see what the outcome of those is. You could write back to them with a copy of that advice. There is no need to worry yet, it's just an invoice and they will need to send a Letter Before Action giving you an opportunity to resolve the issue before going to court.
Yes, banks arent a court of law and so their decisions arent binding. A chargeback however means the hassle and risk of cost shifts from you having to sue the travel agent to the travel agent having to sue you. Given legal fees are rarely awarded in the small track and companies have to think of PR, costs etc the rate of issuing is much lower than consumers against companies.
Can you please point out what in my post is factually inaccurate to be helpful to the whole forum? The government dropped their court case against Ryanair due to there being little prospect of success, and therefore your link is nothing more than an opinion in law, which is an opinion with no legal backing in terms of legislation.
In relation to your second point, the OP will need to act now as they are possibly going to end up in court. There will be no waiting in this event as this matter, CPRs, will be completely out of the hands of the OP.
Bringing the thread back on track following an attempted derailment:
I agree with easier on occasion, especially as banks are well known to be stingy when it comes to giving out money.
Chargeback also has a 120 day limit, where S75 has in theory 6 years (5 in Scotland), even if it's better to act sooner upon becoming aware of a problem for additional protection such as the FoS.
At first glance with the very limited information we have, there's a chance the Chargeback may be reasonable in this case, however we don't have nearly enough information to be able to confirm this either way, which is why I've asked for the above and will respond to in due course.
I can spell, my iPad can't.
The OP nor any any of the Ryanair cases I've seen have acted "fraudulently".
The OP is not definitely "going to end up in court". That is the end of a long processes along which both parties have access to mediation etc. The court being a small claims within the civil process. Nothing criminal here whatsoever.
It is appreciated that you have made your background clear in this post. Everyone is entitled to an opinion but if you are anything but a regular consumer it is right you declare it. Which you have.
It is almost universally reasonable that a chargeback is attempted first given its less hassle for the customer, quicker and leaves the option of a S75 if it fails. It is fairly unreasonable to request the customer hit the higher bar required by a S75 process knowing that if it fails it will be time barred from a chargeback.
My point (from experience) is that a bank will attempt to chargeback, even when S75 is specifically mentioned. It's always better to refund someone elses money than your own, as we all know.
The reference in the last paragraph was meaning reasonable for the OP to have gone down this route, but as with many posts here more info required to be able to give a reasonable opinion on this.
I can spell, my iPad can't.