Section 75 question

Grumpy_chap

ArbitraryRandom said: 

Depending on the purchase, the only other avenue I think you could attempt would be splitting the cost across more than one purchase - for example, if the payment is for building work, as for separate invoices for phases of the work (not scheduled payments, treating them as different jobs) or for materials vs labour; if it's for a home theater system, then perhaps the system and the install could be broken down to separate transactions. Obviously if it's £35k on a single piece of jewellery with free delivery that's not going to work  

The potential catch with that approach of splitting contracts is whether that would reduce the chances of a successful claim in the event of an issue arising.

Consider a kitchen.  One contract with one company to design, supply, install has very clear liability where any issues lie.  Obviously, outwith S75 if above £30k.

Contract with "A" to design and supply and separate contract with "B" to install splits that liability and gives grounds for both parties to wriggle out (or at least attempt to) in the case of a claim situation arising.  S75 may apply, but the CC would be able to apply the same arguments about being the other supplier.  I am not sure that using the same CC would combine the contracts in a way they were not combined otherwise.

Contract with "A" to design and supply plus a separate contract with the same "A" to install might seemingly circumnavigate the £30k limit to S75 and does so in a way that all liability remains with one company.  If that followed on to an issue that gave rise to a claim under S75, would the CC combine the value to greater than £30k and, hence, reject any S75 claim?  It would seem reasonable for the CC to argue that the split contracts was "contrived".

the_lunatic_is_in_my_head

Grumpy_chap said:

This really does seem rather absurd and, ultimately, unsustainable.

Yet there are plenty of card providers out there willing to lend, most be a profit in it somewhere.  

3 years ago the rate on my card was 20%, no idea what it is now, that's a heck of lot more than the same provider was offering on standard savings 3 years ago. 

ArbitraryRandom

Grumpy_chap said:

 would the CC combine the value to greater than £30k and, hence, reject any S75 claim?  It would seem reasonable for the CC to argue that the split contracts was "contrived".

On what grounds? And how would they know...? The credit card company would see the transaction details that you're disputing and the contractual information you provide to support your case. If you have treated them as entirely different jobs (if you could both walk away at the end of each phase of work) then that's what they legally are.

As an example, I'm having fairly extensive building work done on my garden - by the end of this year £30k would actually be a reasonable estimate (maybe early next year) - for ease of my builder fitting the work in around other jobs, my own budgeting and availability, and because I'm not ready to make some design decisions until I've seen how other elements look, I've happily paid him for each bit of work he's done*. Next payment will be £7k next month for a small patio area and raised bed. After that another £10k or so on the main patio and foundations for the shed. No idea how my card issuer would link any of that to the work done previously? 




*It's actually an approach I'd recommend anyway as with large/long jobs you need to have confidence in the trader - if you have had a quote for the whole job and you loose confidence in their ability/the relationship breakdown then it can be a nightmare... if they're only contractually required to complete that 'bit' then the amount of damage they can do is limited, you can naturally check/snag you're happy with the work before moving on to the next bit, and you can just say goodbye and find someone else for the next bit if you need to. It's more controlled (IMO) 

Grumpy_chap

ArbitraryRandom said:

Grumpy_chap said:

 would the CC combine the value to greater than £30k and, hence, reject any S75 claim?  It would seem reasonable for the CC to argue that the split contracts was "contrived".

On what grounds? And how would they know...? The credit card company would see the transaction details that you're disputing and the contractual information you provide to support your case. If you have treated them as entirely different jobs (if you could both walk away at the end of each phase of work) then that's what they legally are.

Yes, I see, especially for your scenario of the staged works to landscape the garden.  As you describe it would clearly be a series of unconnected works.  I don't see in the case of your garden that any of the works were actually at £30k.  You truly could stop and just never do the next bit.

I was thinking of a single project and creating the split.  I think the kitchen scenario I set out differs from the series of garden works.  I almost had in mind, being with the kitchen company and signing both the supply contract and the install contract at the same time and paying two £100 CC deposits within minutes of each other.

born_again

ArbitraryRandom said:

calog said:

I think I have learnt a lesson today regarding section 75.
I paid a deposit with my credit card towards an item worth £35k. I wrongly thought I could claim the £30k covered by section 75 but it was brought to my attention by the credit card company that as the total cost of the item was over the £30k limit section 75 didn't apply.
My question is - how can you cover yourself in such an event? Is there any other way to get protection for over £30k.
thanks.

The best advice has already been given - S75 makes your card provider jointly liable, so while it's easier than a civil suit, your alternative is a letter before action to the seller and court (doing your due diligence that the time/cost is balanced by your chance of success and enforcement). 

Depending on the purchase, the only other avenue I think you could attempt would be splitting the cost across more than one purchase - for example, if the payment is for building work, as for separate invoices for phases of the work (not scheduled payments, treating them as different jobs) or for materials vs labour; if it's for a home theater system, then perhaps the system and the install could be broken down to separate transactions. Obviously if it's £35k on a single piece of jewellery with free delivery that's not going to work  

The danger is if you use one card, then there is a strong chance it will get picked up, or a slip up is made by the claimant about the purchases. 

Okell

born_again said:

ArbitraryRandom said:

calog said:

I think I have learnt a lesson today regarding section 75.
I paid a deposit with my credit card towards an item worth £35k. I wrongly thought I could claim the £30k covered by section 75 but it was brought to my attention by the credit card company that as the total cost of the item was over the £30k limit section 75 didn't apply.
My question is - how can you cover yourself in such an event? Is there any other way to get protection for over £30k.
thanks.

The best advice has already been given - S75 makes your card provider jointly liable, so while it's easier than a civil suit, your alternative is a letter before action to the seller and court (doing your due diligence that the time/cost is balanced by your chance of success and enforcement). 

Depending on the purchase, the only other avenue I think you could attempt would be splitting the cost across more than one purchase - for example, if the payment is for building work, as for separate invoices for phases of the work (not scheduled payments, treating them as different jobs) or for materials vs labour; if it's for a home theater system, then perhaps the system and the install could be broken down to separate transactions. Obviously if it's £35k on a single piece of jewellery with free delivery that's not going to work  

The danger is if you use one card, then there is a strong chance it will get picked up, or a slip up is made by the claimant about the purchases. 

What will get picked up?  That the total cost of all the work will exceed £30,000?

To play Devil's Advocate for the moment, you have (I think?) often pointed out that s75 only applies to purchases of single items where the price exceeds £100 per item up to a maximum of £30,000.

So for example a s75 claim would not apply to a transaction totalling £350 made up of the purchase of five separate items, each costing only £70.  If I've understood correctly.

So couldn't the same argument be used - but the other way round - to make s75 apply to a single transaction costing >£30,000?

So @ArbitraryRandom or @Grumpy_chap or whoever could have their garden landscaping project completed at a total of £50k, but have the invoice itemised in such a way that no "single item" (in the words of the legislation) exceeded £30k, so that s75 would apply?

No doubt I'm missing something obvious, but what?

eskbanker

Okell said:
So @ArbitraryRandom or @Grumpy_chap or whoever could have their garden landscaping project completed at a total of £50k, but have the invoice itemised in such a way that no "single item" (in the words of the legislation) exceeded £30k, so that s75 would apply?

No doubt I'm missing something obvious, but what?

My understanding is that the phrase 'different jobs' used above is key, rather than simply separate invoices - if there are separately identifiable projects, each quoted, commissioned and invoiced independently of the others, then each should be within scope of s75 if below £30K.  Naturally, card companies will devote more effort into arguing the converse when they're on the hook for significant amounts though!

DullGreyGuy

Okell said:

So couldn't the same argument be used - but the other way round - to make s75 apply to a single transaction costing >£30,000?

So @ArbitraryRandom or @Grumpy_chap or whoever could have their garden landscaping project completed at a total of £50k, but have the invoice itemised in such a way that no "single item" (in the words of the legislation) exceeded £30k, so that s75 would apply?

No doubt I'm missing something obvious, but what?

You walk into a car dealership and see a Roadster that you really like but you fancy it with the bigger engine, leather seats, metallic paint etc.  You speak to the dealer and they say the basic car is £29,950 and all the optional extras you want are another £10,000.

So you ask the dealer to invoice you £29,950 for the basic car and on a separate invoice the £10,000 for the v6 engine, leather seats etc so that you get S75 protection. 

Banks will argue that isn't really 5 separate items, it's one item, a car @Okell, that is £39,950 and the splitting it over invoices is artificial hence S75 doesn't apply. 

If you go through the Ombudsman decisions there are many cases in both directions, if multiple bits are really one or multiple purchases. Kitchens are a common one where its argued both ways, that 20x kitchen doors at £99 each aren't covered and that paying for design, parts and fitting on separate invoices is really one job

Grumpy_chap

Okell said:

So @ArbitraryRandom or @Grumpy_chap or whoever could have their garden landscaping project completed at a total of £50k, but have the invoice itemised in such a way that no "single item" (in the words of the legislation) exceeded £30k, so that s75 would apply?

No doubt I'm missing something obvious, but what?

Well, I suspect the CC faced with this scenario would also extend the argument that no "single item" exceeded £30k to assess that no "single item" exceeded the lower threshold of £100.

If I have a £50k landscaping project but want to state that this was in fact a £10k patio, £10k BBQ, etc. why shouldn't the bank split things down to xx qty paving slabs at £5 each and yy qty bricks at £1 each, etc?

I do rather think that applying the straightforward assessment of words can often lead to the most sensible interpretation.  

It is also rather odd to be structuring work specifically to circumvent the thresholds of S75 protection.  If the purchaser is that worried about the work that will be delivered by company A, the more pragmatic thing would be to give the work to more reputable company B.

The case postulated by @ArbitraryRandom was quite different.  That was placing an order for a £10k patio.  Once done and dusted, then placing the second and entirely separate order for the £10k BBQ.  There is no direct link or need for the BBQ to follow the patio, nor does the BBQ require the patio.

ArbitraryRandom

born_again said:

ArbitraryRandom said:

calog said:

I think I have learnt a lesson today regarding section 75.
I paid a deposit with my credit card towards an item worth £35k. I wrongly thought I could claim the £30k covered by section 75 but it was brought to my attention by the credit card company that as the total cost of the item was over the £30k limit section 75 didn't apply.
My question is - how can you cover yourself in such an event? Is there any other way to get protection for over £30k.
thanks.

The best advice has already been given - S75 makes your card provider jointly liable, so while it's easier than a civil suit, your alternative is a letter before action to the seller and court (doing your due diligence that the time/cost is balanced by your chance of success and enforcement). 

Depending on the purchase, the only other avenue I think you could attempt would be splitting the cost across more than one purchase - for example, if the payment is for building work, as for separate invoices for phases of the work (not scheduled payments, treating them as different jobs) or for materials vs labour; if it's for a home theater system, then perhaps the system and the install could be broken down to separate transactions. Obviously if it's £35k on a single piece of jewellery with free delivery that's not going to work  

The danger is if you use one card, then there is a strong chance it will get picked up, or a slip up is made by the claimant about the purchases. 

I think that's only a risk if the work/purchase is of such that it's not genuinely multiple transactions... I'm only suggesting that where there's distinct elements there's a practical and regulatory advantage to seeing if they can be split. 

Like there is booking a package holiday vs individual elements - pros and cons/advantage and risks to both options so the individual would have to decide for themselves.