Section 75 - advice needed for house build

eddddy

I'm no expert on this stuff, but...

1. Are you sure the supplier is treating this as a transaction with a consumer (as opposed to a business)? I've seen building materials suppliers' t&cs that say they don't sell to consumers, so if you buy from them you confirm that you are not a consumer.

If it's not a consumer transaction, section 75 of the Consumer Credit Act won't apply



2. You say that the supplier is setting up credit card acceptance specially for you. That suggests they might be using a "quick and easy" payment processing system, maybe like an iZettle card reader or SumUp card reader.

Back in 2020, the banks were refusing section 75 claims when iZettle or SumUp was used - because they said they broke the debtor-creditor-supplier chain. And the FOS wouldn't give a definitive answer.

I don't know if the situation is clearer now - or if it's got more confusing as even more payment processors / card readers have entered the market.



Here's what Which? said in 2020:

The Which? Money Helpline regularly hears from customers who have lost section 75 protection because they have paid for goods using a credit card via payment processors such as PayPal and Skrill, or card readers such as iZettle and Sum Up. Some card issuers and payment processors have even disputed what types of payment are covered.The Financial Ombudsman Service, which can rule on Section 75 disputes, says it must judge every complaint on a case-by-case basis due to the complexity of the law. So it can be extremely difficult for consumers to be certain when making a transaction whether they will be covered by Section 75, even if they are aware of the potential weaknesses emerging in the system.


Link:https://media.product.which.co.uk/prod/files/file/gm-0e2ef2e1-f693-4fe8-b810-29008d29714c-hmt-payment-landscape-review-which-response.pdf

the_lunatic_is_in_my_head

eddddy said:

I'm no expert on this stuff, but...

1. Are you sure the supplier is treating this as a transaction with a consumer (as opposed to a business)? I've seen building materials suppliers' t&cs that say they don't sell to consumers, so if you buy from them you confirm that you are not a consumer.

If it's not a consumer transaction, section 75 of the Consumer Credit Act won't apply

A consumer is a consumer as defined within the CRA, the terms of a contract can’t change what you are and it would be clear to the company OP is a consumer as they only want to buy windows once for their home so if they are “trade only” they’d have to decline custom rather than attempt to change the definition of what their customer is.  

eddddy

the_lunatic_is_in_my_head said:

eddddy said:

I'm no expert on this stuff, but...

1. Are you sure the supplier is treating this as a transaction with a consumer (as opposed to a business)? I've seen building materials suppliers' t&cs that say they don't sell to consumers, so if you buy from them you confirm that you are not a consumer.

If it's not a consumer transaction, section 75 of the Consumer Credit Act won't apply

A consumer is a consumer as defined within the CRA, the terms of a contract can’t change what you are and it would be clear to the company OP is a consumer as they only want to buy windows once for their home so if they are “trade only” they’d have to decline custom rather than attempt to change the definition of what their customer is.  

As I say, I'm no expert on this... but if the customer says to the supplier "Yes - I'm a trader", how much due diligence is the supplier expected to do to make sure that's true?

And/or if the contract / terms of business say something like "By submitting an order, you are confirming that you are a trader" - is the supplier expected to make further enquiries? 

And/or maybe the customer provides further detail and says: "Yes - I'm building this house as a developer, so it is in the course of a trade/business".

(And hypothetically, maybe a customer purposely misleads the supplier, in order to get cheaper prices.)



Depending on what the OP has said so far to the supplier, perhaps it is worth the OP making it clear to the supplier that they are buying as a consumer, and not as a trader.

born_again

rl290 said:

Hi KM1500,

How will the cc company "know it"? Do CC companies share details on their Section 75 claims with one another, across companies and relating to different individuals? They will simply be presented with a contract, in my name, for goods I have paid for, within the S75 limits. My wife's card co will receive a different set of documents, in her name and for a different date and items. I am genuinely confused about how they "will know it"?

As for what I think, I am genuinely not certain, which is why I am here. Credit card companies sometimes seem keen to separate items in Section 75 cases (to bring each item down below £100, and dismiss the claim) - I am applying the same logic here, but clearly it is murky. In buildhub, many people say they have done this to protect their money. But it is (thankfully!) rare that anyone needs to invoke Section 75. So actual cases on this are lacking.

Good idea about leaving a big gap between contracts. Unfortunately, 6 months won't work with my plans, but something more modest may work.

I now feel confident that:

- Chargeback will be an (imperfect) option (obviously it can and does fail, but it is open to try). Thanks DullGreyGuy for the additional details.

- Section 75 is clearly murky. Born_again's idea to be open and chat to the credit card companies is an excellent one, which I will do and document. (And I will report back next week)

- Thankfully the supplier is well referenced, seems to be very solvent, and has been operating for a long time. So, hopefully we never find out whether Section 75 is applicable or not.

Now for the next problem: seems like a bunch of payment providers break the chain and may invalidate Section 75 claims in any case.. lot's written on this. Urghhhhhhh...!
https://www.moneysavingexpert.com/news/2017/04/revealed-section-75-credit-card-protection-may-fail-due-to-payment-processing-loophole---shoppers-beware/


Thanks again all, appreciate it!
R

While it is not the norm, for CC's to contact retailer, in certain cases they will if they think they can reach a resolution with the retailer.
So in this case if they ring up & discuss the case, odds on retailer mentioning that they have 2 contracts are very large. 
Factor in other spending & what you are doing becomes clear.
Banks are not stupid & will suss out you are building a house.

the_lunatic_is_in_my_head

eddddy said:

And/or if the contract / terms of business say something like "By submitting an order, you are confirming that you are a trader" - is the supplier expected to make further enquiries? 

That one is easy Any terms that attempt to limit the consumer's rights under the CRA are blacklisted and would automatically be void due to being classed as unfair.

eddddy said:

As I say, I'm no expert on this... but if the customer says to the supplier "Yes - I'm a trader", how much due diligence is the supplier expected to do to make sure that's true?

And/or maybe the customer provides further detail and says: "Yes - I'm building this house as a developer, so it is in the course of a trade/business".

(And hypothetically, maybe a customer purposely misleads the supplier, in order to get cheaper prices.)

This is where it gets more grey and I really don't know. 

I would suggest that any business that wants to be trade only would require proof that the customer is a business, in the past for me that has meant trade references, bank references and a VAT number. 

I'm sure a court would take a dim view on someone saying "hey I'm a developer and need thousands of windows but only 13 to start" but wonder if a court would also take a dim view of a trade only place not taking 5 minutes to figure out if that is true or not. 

If someone fills out an application using genuine business details and then says, well that purchase was as a consumer, it's probably less likely to be seen as such but this topic has come up before and I do wonder if where a trader sells x but the trade only supplier they buy from sells x y and z that aren't connected you might have a chance at being a consumer for a specific purchase. If you are a business with Costco for the burger van you run but buy a lawnmower because it's a great deal you are pretty clearly a consumer for that specific purpose but without real life examples I don't think we'll know the answer to extended hypotheticals  

In this case the business must know OP is a consumer as they are discussing S75 with them which wouldn't apply to a business contract (unless I'm wrong on that bit). 

@born_again where is the line with regards to the value. 

I assume 13 windows + fitting at £45k with no breakdown in price is going to be seen as over £30k but instead of this convoluted system OP has thought up, if the window company gave an invoice with 13 lines for 13 windows at various prices plus a 14th line for fitting doesn't that make them single items with a cash price attached?

RefluentBeans

Im confused - has anything happened yet which makes you want to claim S75? All this is purely academic and will get certain posters on here in the weeds of the legalisation but if nothing has actually happened yet, I’m unsure why this conversation needs to be had.

As you can see, the answer is certainly not clear cut. Some will (adamantly) believe it is and it’s clear cut and simple. Others will see it that it’s not. 

Given the value of the order, any claim would be slow as the bank will not just hand over a cool £30k. Or even a cool £3k. 

Additionally, as you are purchasing the windows, which likely makes it a business to consumer transaction, the fitting is paid for separately. This is, bluntly, a bad idea. If the person who fits the windows pays for the windows (and you pay for materials and services) you are fundamentally covered if anything goes wrong with the windows. Buying the windows yourself and hiring someone else to fit them will make things compmicated if anything goes wrong - as is the product faulty? Was it poor fitting? Was it damaged by you? Was it damaged by the installer? The S75, assuming it applies, will only cover the product if it’s faulty. That doesn’t include installing it wrong. 

The safer (but maybe more expensive option) is to get the trader to buy and install the windows. This means if anything goes wrong with them, you can just go back to the trader and say you bought and fitted them, and now this is wrong with them. Please fix it. 

the_lunatic_is_in_my_head

RefluentBeans said:

 The S75, assuming it applies, will only cover the product if it’s faulty. That doesn’t include installing it wrong. 

Well it would do if you pay for the fitting on a credit card as well and that service was over £100

The issues with is it the window or is it the fitting may be a headache but for services (AFAIK) there is burden of proof on the consumer anyway, with goods it's taken the product is "faulty" unless demonstrated otherwise or again on the consumer if after 6 months but either way widows are a pretty common thing, I don't think it would be difficult to get an expert opinion.

I assumed the company OP was buying from was also fitting, if they aren't surely this makes the issue clearer, invoice with the 13 widows itemised and S75 applies in the same way it wouldn't for the trousers example?

RefluentBeans said:

The safer (but maybe more expensive option) is to get the trader to buy and install the windows. This means if anything goes wrong with them, you can just go back to the trader and say you bought and fitted them, and now this is wrong with them. Please fix it. 

But if they ignore you and their house is in their mother's name you aren't going to get far, whereas the credit provider is unlikely to go bust  

born_again

the_lunatic_is_in_my_head said:

@born_again where is the line with regards to the value. 

I assume 13 windows + fitting at £45k with no breakdown in price is going to be seen as over £30k but instead of this convoluted system OP has thought up, if the window company gave an invoice with 13 lines for 13 windows at various prices plus a 14th line for fitting doesn't that make them single items with a cash price attached?

Yes. That is a fair judgement. All depends on just what Op S75 claim would be for. 

If the CC gets wind that this is a house build, then they will take the view of the total value of the build.
You have to remember if this is a CC that is part of a bank that someone has their account with. They will check ALL accounts.

Not sure on what FOS take would be on this, but have seen S75 turned down on the basis that it has been treated as a whole build, rather than each separate invoice. 

This is one of these cases where people seem to think that S75 is like a form of insurance & a general cover all, which it is not.

Given the OP is talking about part CC & part bank payments. This will come out in the wash & I do see their idea on S75 unravelling & leading to a possible world of pain. Due to misrepresenting of the claim.
Hence that they would be better speaking to card providers in the 1st place.

RefluentBeans

the_lunatic_is_in_my_head said:

RefluentBeans said:

 The S75, assuming it applies, will only cover the product if it’s faulty. That doesn’t include installing it wrong. 

Well it would do if you pay for the fitting on a credit card as well and that service was over £100

The issues with is it the window or is it the fitting may be a headache but for services (AFAIK) there is burden of proof on the consumer anyway, with goods it's taken the product is "faulty" unless demonstrated otherwise or again on the consumer if after 6 months but either way widows are a pretty common thing, I don't think it would be difficult to get an expert opinion.

I assumed the company OP was buying from was also fitting, if they aren't surely this makes the issue clearer, invoice with the 13 widows itemised and S75 applies in the same way it wouldn't for the trousers example?

RefluentBeans said:

The safer (but maybe more expensive option) is to get the trader to buy and install the windows. This means if anything goes wrong with them, you can just go back to the trader and say you bought and fitted them, and now this is wrong with them. Please fix it. 

But if they ignore you and their house is in their mother's name you aren't going to get far, whereas the credit provider is unlikely to go bust  

Regardless of if they pay for the fitting or not, if the windows need replacing and the issue is the fitting, and the fitting is less than the cost of the windows, then I don’t see how that helps. The OP would be caught between the supplier and the fitter. S75 isn’t insurance and so the OP hasn’t got a lot of recourse if the bank decide that the issue is actually the fitting. 

Equally, we don’t know, for certain, if this is covered under S75. The bank could deem that this isn’t a B2C transaction (if the terms make it clear the seller only deals to businesses, and the OP has vouched saying that they are a business). In that case, where the consumer chooses to give up their rights (not where it’s buried deep in the terms as a ‘gotcha’), then I think that is kind of out of luck. Plus what has been said about the payment processors potentially breaking the chain, making the S75 claim invalid. 

Ultimately, if the OP is wanting to be proactive and get the maximum certainty that if something was to go wrong, then the best thing they can do is pay a supplier to fit them. Then look at taking out a payment plan to cover the rest of the purchase, a payment plan that will be covered by parts of S75. 

By splitting the order up, and keeping it below £30k to benefit from this may be constitued as malicious, and potentially make the claim more likely to be considered sketchy. It may be fine, it may not be. But it adds, at the very least, complexity to the situation. 

Grumpy_chap

RefluentBeans said:

Equally, we don’t know, for certain, if this is covered under S75. 

By splitting the order up, and keeping it below £30k to benefit from this may be constitued as malicious, 

I actually find the whole idea of trying to take steps to ensure that S75 cover is available all a bit odd.  If I was paying £45k for windows, I would want to be sure that I had a Trader that I trusted sufficiently well not to have to worry about the risk of S75.  If I felt the Trader was sufficiently likely to fail and do the moonlight flit with my money, I'd choose a different Trader rather than the steps to try to ensure S75 was in place.

What payment terms are the windows?
When we had our windows replaced in 2016, that was £30k total order value.  The Trader asked for a nominal £100 deposit, then a materials payment when the windows were delivered (day 1 of the install) and then the balance once we were happy, had the FENSA cert, and all snags resolved.
It may well be a better approach for the OP to get security by appropriate payment terms than payment in full upfront.