s75, Paypal, Shopify, Sum Up etc.

TheoHuckle

Hiya.  Been a member of MSE for years but only just joined Forum so I could post this.

Can someone help me with the up-to-date position on s75 and so-called intervening payments. I’ve seen the reports here and on Which? of the FOS ordering s75 compensation where the credit card companies had declined in the case of PayPal. I’ve also seen the 2020 thread about Shopify.

In the PayPal decisions, it seemed that the basis of finding for the consumer was that the debtor-creditor-supplier (DCS) linkage was not disturbed by PayPal simply effecting the payment to the supplier. I know the FOS has broad discretion to ‘put things right’, but it can only do so in accordance with the law, so this must amount to a ruling by them as to the legal rights of the consumer, or at least their clear interpretation of what the law says.

I have a claim against Amex, which is declining because Shopify effected the payment to the supplier (who has now failed to make the supply and ceased trading). I need the s75 claim as I only paid the deposit  on the card so chargeback is only a limited remedy.

I can’t see what difference there is between PayPal as a simple payment mechanism and the likes of Sum Up or iZettle (I note from a Which report that iZettle itself says that s75 protection still applies where they have handled the payment) or, as with me, Shopify. In all these cases, surely I’m the debtor and always was, the credit card company is the creditor and always was, and the supplier is the supplier and always was. PayPal, Shopify etc play no part at all in the relevant transaction. But perhaps I’m missing something?

Anyway, I’m posting to see whether anyone has any more up-to-date information on these issues.  Isn’t this another financial scandal meriting a group action of some kind?  There must be many people who have been ‘done out of’ their s75 rights by payment interventions they knew nothing about?  Of course the credit card companies have themselves entered the relationships with the interveners in the first place otherwise it just wouldn’t work at all.  I’m struggling to see how they can be allowed to avoid their statutory responsibilities and take away consumer rights that Parliament has legislated for just by doing that, without any obligation on anyone to notify the consumer at the time of taking the payment!?

Look forward to hearing from you. Thanks!

born_again

S75 was never designed for Credit Cards. It was brought in when credit was via loan co that was linked to the retailer & products.

I do struggle with the excuse that Sum up or izettle ilk, take out the debtor creditor link, as they are simply a device that retailers use (card machine) to take payments. 
Not like pay pal where you are using a 3rd party payment processer to take payment & pass to the retailer. Which is clear, as PP have their own dispute process when things go wrong.

How are card co's supposed to notify people in these situations? As by the time payment has gone through it is too late, & these retailers have no other way of taking card payments.

S75 does need bringing up to date, by the card co's will push to pull credit cards out of the system. As they have a good argument that they have no idea on what people are buying, unlike what S75 was set up for.

TheoHuckle

Thanks born_again
Of course I understand the points you make, but this is not about blaming the credit card companies, or (especially small business) suppliers generally, but about consumer protection - out of the vast profits that credit card companies make handling perhaps the majority of payment transactions now, many of them entirely digital and remote so that it becomes more and more difficult for the consumer to make any judgment about the supplier.  And then there's fraud of course!

Also, I know that Paypal has it's own redress scheme, which I have previously used and they were very good, but in the reported FOS decisions the credit card company was nevertheless found responsible under s75.

My view is that if Amex want to boost their business by allowing the interveners to take payments using the consumer's Amex account when they haven't entered into a direct merchant agreement with the supplier, they cannot properly avoid the s75 liability for breach of contract by the supplier.  That seems to be how the FOS saw it in the Paypal cases?

DullGreyGuy

TheoHuckle said:

Hiya.  Been a member of MSE for years but only just joined Forum so I could post this.

Can someone help me with the up-to-date position on s75 and so-called intervening payments. I’ve seen the reports here and on Which? of the FOS ordering s75 compensation where the credit card companies had declined in the case of PayPal. I’ve also seen the 2020 thread about Shopify.

In the PayPal decisions, it seemed that the basis of finding for the consumer was that the debtor-creditor-supplier (DCS) linkage was not disturbed by PayPal simply effecting the payment to the supplier. I know the FOS has broad discretion to ‘put things right’, but it can only do so in accordance with the law, so this must amount to a ruling by them as to the legal rights of the consumer, or at least their clear interpretation of what the law says.

I have a claim against Amex, which is declining because Shopify effected the payment to the supplier (who has now failed to make the supply and ceased trading). I need the s75 claim as I only paid the deposit  on the card so chargeback is only a limited remedy.

I can’t see what difference there is between PayPal as a simple payment mechanism and the likes of Sum Up or iZettle (I note from a Which report that iZettle itself says that s75 protection still applies where they have handled the payment) or, as with me, Shopify. In all these cases, surely I’m the debtor and always was, the credit card company is the creditor and always was, and the supplier is the supplier and always was. PayPal, Shopify etc play no part at all in the relevant transaction. But perhaps I’m missing something?

Anyway, I’m posting to see whether anyone has any more up-to-date information on these issues.  Isn’t this another financial scandal meriting a group action of some kind?  There must be many people who have been ‘done out of’ their s75 rights by payment interventions they knew nothing about?  Of course the credit card companies have themselves entered the relationships with the interveners in the first place otherwise it just wouldn’t work at all.  I’m struggling to see how they can be allowed to avoid their statutory responsibilities and take away consumer rights that Parliament has legislated for just by doing that, without any obligation on anyone to notify the consumer at the time of taking the payment!?

Look forward to hearing from you. Thanks!

Actually no, the FOS isn't a pseudo court and isn't bound to find the same outcome as a court would have. It considers the law but its ultimately charged with finding fair outcomes which can mean it is different to what would have happened in a court room. 

As the law is worded no credit card should be able to get S75 protection because in all cases the merchant will have a merchant services/acquiring bank adding a fourth party to the chain hence your bank and every other global bank doesn't have to approve a new merchant to be able to take card payments. The House of Lords, as the original Supreme Court in the UK, decided on that one rather than the government changing the legislation.

Paypal itself remains that it depends how you use it. Zettle (dropped the I after PayPal bought it), SumUp, DoJo, Square etc should be covered as they are simply a modern equivalent of a merchant account however some card issuers protest but FOS generally upholds the complaints. 

Rather than a "scandal", I suspect the volumes are far too low for that, what really needs to happen is that the law is rewritten. Fundamentally it doesn't make sense in the world of credit cards... it did make sense when originally drafted and that most credit was where a specific bank has agreed to provide the finance to a specific store and hence a direct relationship exists and there is a logic to why the bank is on the hook 

born_again

TheoHuckle said:

Thanks born_again
Of course I understand the points you make, but this is not about blaming the credit card companies, or (especially small business) suppliers generally, but about consumer protection - out of the vast profits that credit card companies make handling perhaps the majority of payment transactions now, many of them entirely digital and remote so that it becomes more and more difficult for the consumer to make any judgment about the supplier.  And then there's fraud of course!

Also, I know that Paypal has it's own redress scheme, which I have previously used and they were very good, but in the reported FOS decisions the credit card company was nevertheless found responsible under s75.

My view is that if Amex want to boost their business by allowing the interveners to take payments using the consumer's Amex account when they haven't entered into a direct merchant agreement with the supplier, they cannot properly avoid the s75 liability for breach of contract by the supplier.  That seems to be how the FOS saw it in the Paypal cases?

You still have your consumer rights.

Anything via cards is over & above.

Amex, Visa & Mastercard. Can not block these companies from their payment method. They would get massive fines if they did.
As DGG has pointed out above, FOS tends to rule in consumer favour in cases other than a personal PP acc being used, as they feel that they are just a extension or another form of a retailers merchant acc. 

Fraud does not fall under S75 👍