Section 75 Refunded in full. The company now threatening Legal Action

BronteGirl

I raised a Section 75 complaint against a well known home improvements company for breach of contract and mi-selling of products and services which were not as advertised and inferior products received which were not fit for purpose. My complaint went to Visa International for a final decision I was successful and refunded in full in January 2024. Now the Home Improvements company has sent me a Pre Legals letter to take me to court to recover the refunded amount. They are also charging me interest of a specified lump sum plus daily interest. I offered to give the goods back in July 2023. My understanding is that the goods now belong to the credit card company? Surely I cant be taken to court? These are fixed items which would need to be replaced by another builder which I have always been happy to do. These were doors that do not fit properly and leak when it rains heavily. Any advice would be helpful if anyone has had a similar experience. I will need to make an appointment with Citizens Advice.

eskbanker

It sounds like your claim was handled as a chargeback rather than a section 75 one, even if you specified the latter, so the net result is that your card company will have retrieved the money from the merchant and passed it to you, leaving the merchant out of pocket, hence the recovery action now - the merchant is quite entitled to pursue this debt through the courts, but obviously you have the opportunity to defend it.

Separately, you could still raise a section 75 claim against your card provider, providing them with the evidence of the breach of contract by the merchant for supplying non-conformant items.

born_again

BronteGirl said:

I raised a Section 75 complaint against a well known home improvements company for breach of contract and mi-selling of products and services which were not as advertised and inferior products received which were not fit for purpose. My complaint went to Visa International for a final decision I was successful and refunded in full in January 2024. Now the Home Improvements company has sent me a Pre Legals letter to take me to court to recover the refunded amount. They are also charging me interest of a specified lump sum plus daily interest. I offered to give the goods back in July 2023. My understanding is that the goods now belong to the credit card company? Surely I cant be taken to court? These are fixed items which would need to be replaced by another builder which I have always been happy to do. These were doors that do not fit properly and leak when it rains heavily. Any advice would be helpful if anyone has had a similar experience. I will need to make an appointment with Citizens Advice.

Visa have nothing to do with S75.
This is a chargeback.
So the goods belong to the company as their merchant bank took the funds off them.

km1500

yes you have taken the money back effectively out of the company's bank account

as a very rough analogy it is the same as cancelling a cheque you had written to them

The company are perfectly entitled to sue you for payment - if it goes to court the judge will listen to both sides and make a ruling on who is right

DullGreyGuy

BronteGirl said:

I raised a Section 75 complaint against a well known home improvements company for breach of contract and mi-selling of products and services which were not as advertised and inferior products received which were not fit for purpose. My complaint went to Visa International for a final decision I was successful and refunded in full in January 2024. Now the Home Improvements company has sent me a Pre Legals letter to take me to court to recover the refunded amount. They are also charging me interest of a specified lump sum plus daily interest. I offered to give the goods back in July 2023. My understanding is that the goods now belong to the credit card company? Surely I cant be taken to court? These are fixed items which would need to be replaced by another builder which I have always been happy to do. These were doors that do not fit properly and leak when it rains heavily. Any advice would be helpful if anyone has had a similar experience. I will need to make an appointment with Citizens Advice.

It's a chargeback, not S75. Most banks will do a chargeback first because it has shorter time limits so can fall back to S75 if it fails whereas in most cases a failed S75 will mean you've timed out on a chargeback. 

As others have explained, you've been refunded at the expense of the merchant hence, given as you've still kept and are using their products/services they arent happy about. 

The chargeback system is based on simple rules written by Visa (or Mastercard/ Amex etc) and whilst contracts allow them to take the money from the merchant its not a legally binding, Visa isn't a court of law and doesn't have the legal standing as say the Financial Ombudsman does. As mentioned, the rules are also basic, they create many "injustices". 

They will be entitled to claim statutory interest, 8% of simple interest if the court rules in their favour... if you let it get that far. Ultimately it's a negotiation or you have your day in court. The fact you've retained and continued to use their products/services despite being refunded in full isn't going to go in your favour. 

danco

Doesn't this raise significant issues regarding Section 75? The OP raised a Section 75 complaint but the credit card company chose to treat it as a chargeback, apparently without informing her. So the credit card peopledid not actually accept the complaint. Is it now out of time to raise Section 75 again?

marcia_

danco said:

Doesn't this raise significant issues regarding Section 75? The OP raised a Section 75 complaint but the credit card company chose to treat it as a chargeback, apparently without informing her. So the credit card peopledid not actually accept the complaint. Is it now out of time to raise Section 75 again?

 It happened to me for a holiday covid refund, the bank did a chargeback rather than s75. I've read multiple other cases in here of the same thing happening to them 

eskbanker

danco said:

Doesn't this raise significant issues regarding Section 75? The OP raised a Section 75 complaint but the credit card company chose to treat it as a chargeback, apparently without informing her. So the credit card peopledid not actually accept the complaint. Is it now out of time to raise Section 75 again?

It doesn't really raise significant issues about section 75 as such, but the conduct of this card company (and others to be fair) in choosing to recover funds from the merchant (to OP's ultimate detriment) rather than putting their hands in their own pockets.

As mentioned in my earlier post, it isn't out of time to insist on a s75 claim....

Grumpy_chap

eskbanker said:

It doesn't really raise significant issues about section 75 as such, but the conduct of this card company (and others to be fair) in choosing to recover funds from the merchant (to OP's ultimate detriment) rather than putting their hands in their own pockets.

As mentioned in my earlier post, it isn't out of time to insist on a s75 claim....

It is partly the CCs protecting their own interests in processing chargeback first in preference to S75, but also the chargeback is processed on quite limited information and with relative speed - pretty much the CC will act purely on the individual's say-so in the same way as an individual can instruct a bank to stop a cheque.  The bank will take the individual's instruction and act.

The chargeback then gets taken from the supplier's account and credited to the individual.  The result, from the supplier's perspective, is that the individual has the goods and also has the money.  

S75, on the contrary, holds the CC jointly liable for the breach of contract as the supplier.  Before settling an S75 claim, the CC will require much more information, the process is slower, and there is a need to demonstrate the breach of contract to the satisfaction of the CC before funds are released.

It shows the flaws with the S75 process.
It also shows the flaws with the way the claims are processed by the CC - request an S75 claim but it is processed as chargeback regardless.

In this thread, there is too little information for anyone to comment as to whether the supplier breached contract or not.

DullGreyGuy

danco said:

Doesn't this raise significant issues regarding Section 75? The OP raised a Section 75 complaint but the credit card company chose to treat it as a chargeback, apparently without informing her. So the credit card peopledid not actually accept the complaint. Is it now out of time to raise Section 75 again?

There are many issues with S75 but this isn't one of them. 

The OP has admitted to not understand the difference between S75 and Chargeback and so I would respectively suggest a pinch of salt is needed on what actually happened when the problem was raised with the card issuer. OP could have been saying S75, the bank could have been saying Chargeback and the OP didnt clock it. Certainly with the banks I actively use you raise a "dispute" online for a transaction, there is no mechanism to specify if it's a S75 or Chargeback. 

There are reasons why doing a chargeback first is the sensible approach:
1) 110 day time limit -v- 6 years, there is always time to do a S75 after a failed Chargeback, the reverse wouldn't be true
2) Chargeback is a simple process with only basic evidence required, S75 will often require the customer to pay for expert reports etc. 
3) Chargeback is quicker, most banks refund the money instantly (with a warning it may be clawed back), S75 you have to wait for the full process to run before any chance of getting money back. Cases can take months especially if there are disputes on the quality of the reports and further information is required etc.

There is the matter of money coming from someone else's pocket than the banks but thats not true in all cases, the merchant bank actually pays the chargeback and in cases of insolvency etc they won't be able to get it back. In some cases the merchant bank and the consumer's bank will be the same group so it's going to be them paying either way. 


It's not out of time to now do a S75 but the liability has already been extinguished by virtue of the OP receiving a full refund. Were they to be taken to court by the merchant and lose the case then S75 wouldn't apply as all it does is mirror the liability from the merchant to the bank and the court will have ruled the merchant wasnt liable so nothing to mirror. 

eskbanker

Grumpy_chap said:

eskbanker said:

It doesn't really raise significant issues about section 75 as such, but the conduct of this card company (and others to be fair) in choosing to recover funds from the merchant (to OP's ultimate detriment) rather than putting their hands in their own pockets.

As mentioned in my earlier post, it isn't out of time to insist on a s75 claim....

It is partly the CCs protecting their own interests in processing chargeback first in preference to S75, but also the chargeback is processed on quite limited information and with relative speed - pretty much the CC will act purely on the individual's say-so in the same way as an individual can instruct a bank to stop a cheque.  The bank will take the individual's instruction and act.

The chargeback then gets taken from the supplier's account and credited to the individual.  The result, from the supplier's perspective, is that the individual has the goods and also has the money.  

S75, on the contrary, holds the CC jointly liable for the breach of contract as the supplier.  Before settling an S75 claim, the CC will require much more information, the process is slower, and there is a need to demonstrate the breach of contract to the satisfaction of the CC before funds are released.

It shows the flaws with the S75 process.
It also shows the flaws with the way the claims are processed by the CC - request an S75 claim but it is processed as chargeback regardless.

In this thread, there is too little information for anyone to comment as to whether the supplier breached contract or not.

Perhaps it's semantics but I still don't see this situation as showing the flaws with the s75 process as such!

Putting to one side the fact that card companies will sometimes unilaterally act in their own interests, the customer basically has two different processes to choose.

As you say, s75 involves holding the creditor liable to the debtor, and it's therefore an intrinsic part of that process that the creditor will need time and information in order to respond to that claim - that's not a 'process flaw' as such, it's just an inevitable part of holding a company legally liable.

Chargeback is an entirely different proposition involving recovery of funds from the merchant without any actual determination of liability - while it's typically quicker and simpler it doesn't fully resolve the matter in the way that s75 does, thereby leading to situations like OP's.

In other words there are pros and cons of each approach, or to put it another way, both have their flaws!  So when the previous poster said "Doesn't this raise significant issues regarding Section 75?", I maintain that it raises issues about both s75 and chargeback, but, as we all agree, definitely raises issues about how card companies pick whichever suits them better....