Called to court after Sec75 approved

Casskale

Manxman_in_exile said:

eskbanker said:

Peacetopher said:

we then have a notice of a court summons in the small claims court from the shop that refused to respond or didnt object to the Section 75 chargeback in time.

In terms of the wider discussion about how appropriate it is for a bank to unilaterally choose chargeback instead of s75, I'd imagine that it's very much the exception rather than the rule that a merchant would simply ignore an attempted chargeback and then incur incremental time, effort and money pursuing the matter via court, so the balance of probabilities would normally support the bank's choice....

HillStreetBlues said:

eskbanker said:

In terms of the wider discussion about how appropriate it is for a bank to unilaterally choose chargeback instead of s75, I'd imagine that it's very much the exception rather than the rule that a merchant would simply ignore an attempted chargeback and then incur incremental time, effort and money pursuing the matter via court, so the balance of probabilities would normally support the bank's choice....

I would echo that.

Can't see that many retailers that either don't contest a CB  or fail in the defence  to then take a customer to court.

As I see it, the problem here is not what happens in the vast majority of cases where things don't go wrong, or whether on "the balance of probabilities" it would usually make sense (to the bank... ) for the bank to initiate a chargeback first.  

The problem is the very small minority of instances where things do go wrong - the customer wins a chargeback and the retailer sues them.

This does happen, and there's an example here where the customer didn't want any more hassle from the trader and simply caved in when sued and returned the chargeback to the trader without a fight:   Credit card company refunded under s75, now the retailer is wanting me to pay them back - Page 9 — MoneySavingExpert Forum   (And that's also another example where a consumer asked for a s75 claim but a chargeback was initiated without the customer being told).

If a bank's customer has a valid s75 claim, but it's still genuinely in the customer's interests* to initiate a a chargeback first, then ok.

But, as I said in my previous reply to DullGreyGuy, the quid pro quo for that (ie where the customer had a valid s75 claim) should be that the bank agrees to provide their customer's defence in court should they subsequently be sued by the trader after a successful chargeback. 



*And I'm not convinced in any case that doing a chargeback is always in the customer's best interests, and I think that what is in the customer's best interest is the only criterion that should be used by a bank in deciding which route to go down.

If the retailer has a valid claim against the buyer, then so would the CC company, who would very possibly decline their S75 claim.

If the retailer has no valid claim the buyer can defend their position in court and win.

This all seems to revolve around the idea that most S75 claims aren't heavily investigated, so banks are an easier target than retailers.

Judges live in the real world (well some of them anyway) and I suspect are unlikely to be drawn into the line that you're spinning.

TLDR; The consumer is only worse off IF they have no consumer rights to a refund, at which point they don't really have a leg to stand on if that is the sole basis of their complaint.

eskbanker

Manxman_in_exile said:

eskbanker said:

But are banks actually required to act in the customer's best interests in scenarios where the nature of the relationship is that the interests of bank and customer are diametrically opposed, such as s75, where the customer is holding the bank legally liable in an essentially adversarial stance, unlike chargeback where bank and customer are effectively acting in unison against a third party?

Terms like 'duty of care' and 'treating customers fairly' require nuanced interpretation, so it's not clear to me that banks are actually required to prioritise customer interests over their own in these specific circumstances, but happy to be persuaded otherwise via directly relevant citations from FCA, FOS, etc?

I'd be happy for any confirmation of what duties a bank legally owes their customers, but I would have thought there would at least be a presumption that the bank owed them a fiduciary duty.  The customer has after all entrusted the bank to look after their money.

But in the only scenarios involving valid s75 claims, the bank has entrusted the customer with its money....

Manxman_in_exile said:
If a bank wants to avoid an actual, or even apparent, conflict of interest then it shouldn't be looking at dealing with disputes on a s75 basis when it is they who are the creditor.  But if they do decide to entertain s75 claims, then they shouldn't divert valid s75 claims down the chargeback route - unless it's clearly to that customer's benfit to do so.  However, if it then goes wrong and turns out that it wasn't in that customer's interests, the bank should sort out the ensuing mess* that they,ve left their customer in.

*Being sued by a trader when the customer had a good s75 claim all along

Putting aside the chargeback alternative, credit card providers don't have a choice about whether to look at dealing with disputes on a s75 basis when it is they who are the creditor, so it's not a decision to entertain s75 claims, it's an obligation under the Consumer Credit Act 1974!

TELLIT01

This may already have been suggested, but if you have legal cover on household insurance it would be worth speaking to them about the situation.

the_lunatic_is_in_my_head

Casskale said:

If the retailer has a valid claim against the buyer, then so would the CC company, who would very possibly decline their S75 claim.

If the retailer has no valid claim the buyer can defend their position in court and win.

I think this is a sound principle, with one small caveat, the bank suffers the same liability so must know their obligations which in turn means they must know the consumer's rights whereas the average consumer has no idea about their rights and simply panics when a court claim lands on their door mat which is something the bank picking S75 over a chargeback would avoid.

@Peacetopher OP if you are still reading:

1) When did you buy the bed?
2) What was the problem with it?
3) Did you contact the retailer, if so when and what did they say? (It seems they may not have replied but the date of contact is relevant). 
4) After the bank refunded you did you contact the retailer again about them collecting the bed, if so how many times and what did you say? 

sheramber

We still don't know how the OP paid for the bed .

Debit card or credit card?

born_again

HillStreetBlues said:

If the OP loses/ doesn't defend, then the OP can use the S75

Except we have no idea how the OP paid. other than a mention in title of S75.

born_again

Manxman_in_exile said:

So if the bank thinks that a chargeback is in the customer's better interests (as opposed to the bank's) rather than a good s75 claim, what should the bank do if their customer subsequently gets sued by a disgruntled trader?  I think the bank - if they decided not to process a valid s75 claim because not doing so was in their customer's best interest - should provide their customer with a defence.

What do you think?

(Apologies - I'm not getting at you personally here, but as you know from several previous threads I don't like the way banks seem to prioritise chargebacks over s75 claims.  Seriously, no personal ill-will intended)

No offense taken. It is good to have both sides of a good debate  👍

The customer already has this from the details provided to the bank. If you think about S75. You have to prove your case to the bank that retailer is liable before the bank will pay out, same as you would if it went to court.🤷‍♀️

As I see it this is a danger of using 3rd party means to reclaim funds, rather than exercising your consumer rights via the courts.

Even if S75 was used, & the chance that bank claimed funds back from retailer via either a chargeback or via other means.
Retailer could still take customer to court to reclaim their loses. As that is where their contract is. 

Like any business, a bank has a duty to it's stakeholder to minimise losses. So if there is a right to claim funds back without loss, that is the route that will be taken.

DullGreyGuy

Undervalued said:

Manxman_in_exile said:

DullGreyGuy said:

Manxman_in_exile said:
To my mind that makes it even more important that banks should be acting transparently in their customer's best interests and not their own.

There are pro's and con's to both and particularly because you can do a S75 after an unsuccessful chargeback but because of the chargeback timelimit the opposite is rarely true is probably the deciding factor in my mind at least why its in the customer's interest to do a Chargeback before a S75 claim.

If the bank can honestly and sincerely say that it will be in the customer's (and not its own) best interests for the bank to pursue a chargeback first, and that if that chargeback fails then the bank will still do a s75 claim at no detriment to the customer - then fair enough.

But that's of no help to a customer who has had a successful chargeback and then finds themself being sued by the trader.  What the position there should be is that the bank tells their customer:  

"OK.  We think you probably have a valid s75 claim, but for reasons we really don't want to explain to you we would prefer to try a chargeback first.  If that chargeback fails we will still process a s75 claim for you.  And if that chargeback is successful, but the trader subsequently sues you in court, we will provide your defence to that claim at no cost or inconvenience to yourself because we think your s75 claim would be valid".

That's if it genuinely is in the customer's best interests to initiate a chargeback first.

If it isn't genuinely in the customer's best interests, the bank should do a s75 claim if applicable

Surely the bank must do as the customer instructs, so long as it is within the law and within the terms and conditions of the account?

Advising the customer which is the best choice would surely amount giving financial and / or legal advice - both regulated activities?

In most cases these days you're told to go online/app and raise a dispute on the payment which therefore isnt explicitly raising a chargeback or S75.

Even in my own last case of saying I wanted to raise a chargeback the agents response on the phone was "I am going to raise a dispute on that payment, is that ok?"  In that particular case it was a chargecard so no S75 rights but still they referred to it as a dispute.

An additional problem with all of this is that banks/insurers etc are all actively pushed to use plain english and not blind people with jargon or technical terms etc. The issue is that technical terms exist for the reason of being very precises and so the use of non-technical terms (dispute -v- chargeback -v- S75) leaves room for interpretation and misalignment. 

I'm not sure if it would count as financial advice but certainly the bank would want to stay way clear of being able to be accused of giving legal advice.

DullGreyGuy

born_again said:
As I see it this is a danger of using 3rd party means to reclaim funds, rather than exercising your consumer rights via the courts.

Even if S75 was used, & the chance that bank claimed funds back from retailer via either a chargeback or via other means.
Retailer could still take customer to court to reclaim their loses. As that is where their contract is. 

Like any business, a bank has a duty to it's stakeholder to minimise losses. So if there is a right to claim funds back without loss, that is the route that will be taken.

Its a risk yes, but it puts the hassle onto the retailer to make the claim and its clearly the minority that do so. There are some in middle grounds (eg RyanAir) who instead just block you from being a customer again until you've repaid the monies owed. Companies typically think more economically than individuals and wont spend £200 on irrecoverable lawyer's fees trying to reclaim £50.

The ability for a bank to recover from the retailer is an interesting one, theoretically given from your own posts you state banks dont attempt recovery. The CCA is notably different to insurance legislation in that it simply states the creditor is jointly liable and doesnt talk at all about a right of recovery or subrogation. Insurance law is different, it says when your insurer fixes your car that they inherit your right to pursue the third party for their losses in your name.

You therefore have to look at what legal basis they may have to attempt to recover from the retailer. If we are talking instore finance then you may get the circle because the retailers contract with the lender may talk about indemnification but when you are considering credit cards more often than not there is no direct contract between the retailer and the lender and so highly questionable what grounds they have as the CCA doesnt give them any.

born_again

DullGreyGuy said:

 but when you are considering credit cards more often than not there is no direct contract between the retailer and the lender and so highly questionable what grounds they have as the CCA doesnt give them any.

This is exactly another reason why the CCA needs a full reassessment. 
Coming up to 50 years old & so much has changed.