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Paying for your holiday, PayPal and Section 75

We accept payment for your holiday by bank transfer or PayPal.

We prefer payments by bank transfer because they are much cheaper for us than PayPal payments: PayPal charges us an average of around 3% per transaction (so about £20 for an average holiday) whereas bank transfer receipts are included in our monthly bank fee.

Contrary to popular belief, and because we’re not scammers, a bank transfer is very safe – as long as you check the details of your payment several times to make sure it’s going to us and not Anzhelika Litvinova.

Where a bank transfer can leave you a little exposed, of course, is in the unlikely event that something goes wrong and we’re unable to supply you with your holiday.

Other than its inherent flexibility (you can pay by multiple methods) paying by PayPal gives you plenty of protection.

Firstly, however you pay by PayPal, you will be covered by their Buyer Protection Policy, which means they should reimburse you for the full purchase price of your holiday.

Secondly – and again contrary to popular belief – you may be eligible for protection under Section 75 of the Consumer Credit Act. It all depends on how you pay.

Most people will have heard of the wonderful piece of legislation that is section 75, but many may not know the inevitable ‘ins and outs’.

(If you want to skip the lecture on Section 75, jump directly to ‘Paying for your holiday with us’)

What is Section 75?

Section 75 is a fantastic piece of consumer protection legislation which was enacted way back in the 1970s. In essence it means that if you buy something on your credit card, your credit card provider takes the same responsibility – is as equally liable – as the retailer if things go wrong with the purchase. Holidays are covered.

What’s more, you get the protection for the whole cost of your holiday, even if you only pay for a part of it on credit. The only condition is that what you’re buying must cost more than £100 and less than £30,000 in total. As long as it does, you’ll be covered for the full amount, even if you only pay 1p of it on your credit card.

Read those last two sentences again.

There is a common misconception that you need to pay a at least £100 on your credit card to benefit from the protection, but that’s not the case. The item itself must cost at least £100 (and not more than £30,000), but the deposit you pay on your credit card can be as little as 1p.

The protection covers a ‘single item’, so what counts as a single item, especially in the context of paying for your skiing holiday with us?

Look at it this way: if you bought a bike from Halfords for £99 (as if) on your credit card and then went back and bought some panniers for £30, again on your credit card, you wouldn’t be covered. You would be covered, though, if you bought the whole package at the same time for £129.

Sadly (and happily as far as section 75 is concerned), none of our holidays is less than £100 (or more than £30,000!). This means that if you pay for a holiday for you, your wife and your son using your credit card, you will be covered by Section 75. If later your daughter decides to join you, you will be covered for the cost of her holiday too, assuming you paid by credit card.

“But hang on a minute”, I hear you thunder indignantly “I thought I wasn’t covered by section 75 if I paid by Paypal”

Almost, but not quite. Stick with me here, for it gets a bit complicated.

Before we get into the PayPal/credit card/section 75 connection, let’s look at a bit of context.

For the cost of your holiday, purchased using your credit card, to be protected by section 75, there has to be a direct link between you, the issuer of your credit card and the supplier. A bike costing more than £100 that you bought from Halfords using your credit card would be protected:

You aren’t protected by section 75 if the link is indirect. For example, if to buy said bike you withdrew money from a cashpoint using your credit card and went to Halfords and paid cash, you wouldn’t be covered:

It’s worth noting that section 75 protection only applies to purchases with credit cards, not debit cards cash, cheques, prepaid cards, or your PayPal balance.

What’s the problem with PayPal?

If you bought the bike from Halfords online, using your credit card via you PayPal account, what you’re actually doing is paying PayPal, which then pays Halfords on your behalf. Using PayPal therefore adds an additional link into the chain, between you and Halfords, in exactly the same way as the cash-payment example above. The direct link is broken and you are not covered by Section 75.

However, it’s not quite that simple, because there are several different ways to use PayPal to buy things online. While you lose your Section 75 rights with some transaction types, you may still be covered with others.

Here’s when you ARE (and AREN’T) protected by Section 75 using PayPal

It boils down to whether you are, or are not, logged in to your PayPal account when you pay for something, like a skiing holiday, online.

If you log on to your PayPal account and pay for your holiday by any means – credit card, debit card, PayPal balance, etc. – you will not be covered by Section 75, as PayPal is acting as the intermediary and the direct link between you, your credit card issuer and the supplier is broken.

Please note, though, that you are still covered by PayPal’s own Buyer Protection Policy, which gives quite significant protection.

Allow me to introduce ‘payment processors’ here. Payment processors are used to transfer your card data and funds securely from your credit card to the business you’re buying from. Crucially, payment processors only manage the transfer of funds, they don’t accept the funds from your credit card and then pay it on. This means that that the direct link between you, your credit card supplier and the retailer is still intact.

What that boils down to is that when it comes to Section 75 protection, there is a difference between using your PayPal account or simply giving your credit card details at checkout in order to complete a payment. In the former you are not protected; in the latter you are.

Recent judgements from the Financial Ombudsman support this.

Paying for your holiday with us

That’s the lecture on PayPal and Section 75. But what does it mean in relation to booking your holiday through us? Read on!

  • Your holiday will cost more than £100 (and less than £30,000)
  • You are paying for a single item (the holiday, under the same reference) regardless of the number of people in the party.
  • We use PayPal as a payment processor.

Here is our recommendation for paying for your holiday:

  • When you receive our request for the deposit for your holiday, get in touch with us and request payment by credit card.
  • We will call you back at a time convenient to you and take your deposit payment (£125 x the number of people in your party) by credit card – MAKE SURE YOU ARE NOT LOGGED INTO YOUR PAYPAL ACCOUNT AT THE SAME TIME.
  • 12 weeks before your holiday is due to start, we will invoice you for the balance. Pay this by bank transfer.
  • You will be covered by Section 75 for the whole cost of your holiday.

If, when we take your deposit payment by credit card, you were logged into your account you MAY NOT BE PROTECTED as it makes it harder for card providers to tell whether PayPal acted as a middleman, or simply a payment processor.

If in doubt: LOG OUT

Do I get Section 75 protection if I use PayPal Credit?

If you use PayPal Credit to buy something you ARE protected. In 2016, PayPal introduced PayPal Credit to the UK. This is a digital line of credit you can add to your PayPal wallet – essentially a virtual equivalent to a credit card. Using funds from this pot to pay online gives you BOTH Section 75 cover and PayPal protection.

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