Payment Services Regulations: Section 63

[Wipeout]

Hi,

Just over a year ago (December 2015) my Mother and Aunt went on holiday to Tenerife and were scammed out of their pensions whilst there.

Without going into too much detail, the merchant who scammed them presented a blank payment terminal for them to set up a D/D by entering their card and PIN. They questioned why it was blank but were just told that it appears that way for D/Ds. The item they were purchasing was supposed to cost little over £1,000 and the monthly claim was to be £10 per month.

The theft was discovered when they returned from the UK and we asked the Bank for a refund under the above act. The Bank subsequently refused due to the transactions being authorised (despite the regulation covering authorised transactions) and the case was referred to FOS. The ombudsman viewed our case and decided that it was not fair for the Bank to repay the loss and didn't believe that the PSRs covered an authorised transaction in this particular context.

Is there anyone who has a familiarity with these regulations who could confirm my suspicion that the transactions should have been covered and that we should now be taking legal action against the Bank/FOS?

Any help would be greatly appreciated as this has been a complete nightmare!

[leclerc]

Re: Payment Services Regulations: Section 63

The terminal appears to be them giving authorisation for the payment. When did they then withdraw authorisation?

[Wipeout]

Re: Payment Services Regulations: Section 63

Hi Leclerc,

We ended up not disputing the authorisation aspect of the challenge as the section we cited from the PSRs details circumstances in which authorised payments should be refunded by the service provider.

Would it be helpful if I copied the relevant section in the thread?

[Wipeout]

Re: Payment Services Regulations: Section 63

Hi,

For reference, I've copied the section I was relying on below. My interpretation is that if the authorisation was made in accordance with Section 55 (third bullet) that a refund could be request in accordance with Section 64 (second bullet) if the criteria in Section 63 (first bullet) are met.

As my Mother and Aunt could not see an amount on the terminal, were told that they would be paying no more than £1,000 in total, have never spent sums in the region of the £16,000 that was stolen even in the UK (let alone abroad) and there is no stipulation in the Bank's T&Cs that waives the customer's rights to a refund I believe that section 63 should have been satisfied and that the PSRs should have applied in the context of these transactions.

If you / anyone familiar with this type of legislation could take a look at the below and let me know your conclusion it would be greatly appreciated:

• Section 63 details the circumstances in which a consumer is entitled to a refund of the full amount of an authorised payment:

Refunds for payment transactions initiated by or through a payee

63.—(1) Where the conditions in paragraph (2) and the requirement in regulation 64(1) are satisfied, the payer is entitled to a refund from its payment service provider of the full amount of any authorised payment transaction initiated by or through the payee.(2) The conditions are that—
(a)
the authorisation did not specify the exact amount of the payment transaction when the authorisation was given in accordance with regulation 55; and
(b)
the amount of the payment transaction exceeded the amount that the payer could reasonably have expected taking into account the payer’s previous spending pattern, the conditions of the framework contract and the circumstances of the case.
(3) The payer and payment service provider may agree in the framework contract, in respect of direct debits, that the conditions in paragraph (2) need not be satisfied in order for the payer to be entitled to a refund.(4) For the purposes of paragraph (2)(b), the payer cannot rely on currency exchange fluctuations where the reference exchange rate provided under regulation 36(2)(d) or paragraph 3(b) of Schedule 4 was applied.(5) The payer and payment service provider may agree in the framework contract that the right to a refund does not apply where—

(a)

the payer has given consent directly to the payment service provider for the payment transaction to be executed; and

(b)

if applicable, information on the payment transaction was provided or made available in an agreed manner to the payer for at least four weeks before the due date by the payment service provider or by the payee.

• Section 64 sets out the sequence of events that must transpire in order to request the refund:
  

Requests for refunds for payment transactions initiated by or through a payee
64.—(1) The payer must request a refund under regulation 63 from its payment service provider within 8 weeks from the date on which the funds were debited.(2) The payment service provider may require the payer to provide such information as is reasonably necessary to ascertain whether the conditions in regulation 63(2) are satisfied.(3) Subject to paragraph (4), the payment service provider must either—(a)
refund the full amount of the payment transaction; or
(b)
provide justification for refusing to refund the payment transaction, indicating the bodies to which the payer may refer the matter if the payer does not accept the justification provided.
(4) Where an agreement in accordance with regulation 63(3) applies, the payment service provider must, notwithstanding that a condition in regulation 63(2) is not satisfied, refund the full amount of the payment transaction.(5) Any refund or justification for refusing a refund must be provided within 10 business days of receiving a request for a refund or, where applicable, within 10 business days of receiving any further information requested under paragraph (2).

• _{Section 55 sets out the generic terms under which authorisation is considered to be an authorisation:}
  

Consent and withdrawal of consent

55.—(1) A payment transaction is to be regarded as having been authorised by the payer for the purposes of this Part only if the payer has given its consent to—(a)
the execution of the payment transaction; or

(b)
the execution of a series of payment transactions of which that payment transaction forms part.
(2) Such consent—
(a)
may be given before or, if agreed between the payer and its payment service provider, after the execution of the payment transaction; and

(b)
must be given in the form, and in accordance with the procedure, agreed between the payer and its payment service provider.
(3) The payer may withdraw its consent to a payment transaction at any time before the point at which the payment order can no longer be revoked under regulation 67.(4) Subject to regulation 67(3) to (5), the payer may withdraw its consent to the execution of a series of payment transactions at any time with the effect that any future payment transactions are not regarded as authorised for the purposes of this Part.

[leclerc]

Re: Payment Services Regulations: Section 63

Will take a further look at this tomorrow when I will be a little bit more alert.

Ok, a couple of points:

1) Was the payments completely taken out of the account by the time that this issue was reported back in the UK?
2) Was there any contract for the amount of the transaction?

Am gonna look at the issue above as well. I don't like your argument on the fact that you authorised the payments either because if you authorised an amount then clearly the bank does not need to refund all amounts taken out. Hopefully tomorrow my very tired Friday brain will be more alert.

Was is not report as fraud either?

[Wipeout]

Re: Payment Services Regulations: Section 63

No worries, thanks for taking a look at it.

In answer to your question:

1) The transaction was made in the evening of the day that the PIN was entered into the terminal (a few hours later) and the loss wasn't discovered until a few days later when my Mother returned to the UK. It was then reported to the Bank as Fraud but they refused to look at it on this basis as the Card had been present when the transaction was authorised; we therefore pursued the claim under the PSRs.

2) There was no written contract for any amounts at all. The Bank tried to claim the funds back via the Chargeback process but the company produced forged invoices; I paid for a handwriting expert to provide a report but the Bank refused to accept our evidence point blank as the case had been referred to the Ombudsman by this point. The Ombudsman took the handwriting report but it did not seem to factor into their decision making and no further challenge to the chargeback response was made.

I understand your stance on authorised payments but if you could read through the legislation I've quoted and let me know what you think it would be appreciated as I'm convinced that it was designed to protect consumers from situations such as this.

[leclerc]

Re: Payment Services Regulations: Section 63

It was still a fraud case when they produced an invoice with forged signatures.

Was this done as a single payment with a VISA debit card? I might have a different angle potentially and did the bank provide you with a copy of the invoice?

[Wipeout]

Re: Payment Services Regulations: Section 63

Yeah they are VISA debit cards and both were single payments; the Bank sent on the invoices for both my Aunt and Mother so we have those and the handwriting analysis.

Do you think the legislation in the PSRs is irrelevant in this context?

[leclerc]

Re: Payment Services Regulations: Section 63

Then what goods were on the invoice and what goods did they receive?
I'm thinking possible sale of goods act.....I'd also look for the product from the company online as well.

OK, let's be honest, I don't think you have a case in the UK and depending on laws in Spain you might have a civil case there.

[Wipeout]

Re: Payment Services Regulations: Section 63

Well they were supposedly signing up for a satellite TV and Internet service which was to be delivered by inserting a card into their device (they actually just received SD memory Cards) and the invoices were for a couple of items of expensive jewellery.

We've pursued this over in Spain but we're receiving little communication from the Police and have no faith in them whatsoever, my Mother luckily used to work with international students at a University and has been able to ask an old student who speaks Spanish to call for updates but we're just being told that it's being looked into whenever we call and they won't provide any further information.

If you could explain why you believe there is no case within the PSRs it would be appreciated as I was under the impression that this was legislation that should be enforced on Payment Service Providers within the UK? If this isn't the case then I really don't think we'll be able to get this money back.

[leclerc]

Re: Payment Services Regulations: Section 63

My understanding is that you do not say that you did not authorise the payment so consent was given and was not withdrawn prior to the transaction.
I would add that the payee would dispute that the amount was not given which does rule out section 63(2). Post one you have said that they were aware it would be not much more than £1000.00. Clearly their response to that was to provide an invoice which gave the amount that they debited.

I do have another question: why would they keep a high value amount of cash in the current account? How would the fraudsters(that's what I am calling them) have known how much more money to take from the account? Were there any declined transactions after that amount of money was taken from the account?

I'm a little confused as to how they stopped taking money from an account if the fraudsters did not have an idea of how much money to take without a payment order being declined..

I was aware of UK ATM fraudsters who would make two quick cash machine withdrawals late at night to take out as much as possible with cloned cards but with overseas transactions, at a certain point, the card would have been declined due to lack of funds. Did you ever find out if they attempted to take out MORE than was actually withdrawn?(that might have pointed to fraud as well possibly especially since the invoice was provided).

My brain is thinking multiple things: I would have gone fraud on the issue of not providing jewellery whilst not disputing the other items, Sale of Goods Act in regards to the items received(VISA Debit card and transaction over £100 means bank shares liability). I'd have investigated the shit out of the company where the invoice came from, plus ownership of company plus the items listed and plus any reviews on the company.

The problem I keep having is Authorisation was given and no invoice was obtained prior to giving consent. That opened the door for a fraudulent invoice invalidating PSR sections you've quoted.

[Wipeout]

Re: Payment Services Regulations: Section 63

Thanks for giving your thoughts on it, I appreciate the time you've spent on this.

My counter-argument regarding the £1000 being known is that the total amount (of £1000) was verbally mentioned prior to the authorisation; at the actual point of authorisation (i.e. when the PIN was entered) no amount was shown. If the amount of £16,000 (euro equivalent) was showing on the screen then no authorisation would have been granted. I would therefore argue that as the £1000 was the anticipated total amount for the 'service' provided (taken at £10 per month), the actual debit of £16,000 is in excess of what the customer could reasonably expect to pay as per section 63(2b).

The Bank confirmed that only one authorisation was sent to each account - the fact that they knew they could get away with so much has stumped me somewhat but taking into consideration that the Bank was Santander which offered a high interest rate on balances up to £20k I am thinking that they juts took a stab at it believing that they'd get a high success rate with pensioners trying to take advantage of the interest rate.

We did try to get the Bank to look at the Fraud angle at first but they refused as a genuine Card & PIN had been present and we only found out about the jewellery invoices when the Bank returned the response they received from the Chargeback request. We told the Bank straight away that the invoices were fraudulent but they had already accepted the decision and refused to discuss it any further despite us paying for a handwriting expert to disprove the signatures. It was at this point that I began looking for other possible ways to retrieve the lost funds (including legal action in Spain); we did our research on the company who took the funds who turned out to be some pharmaceutical company and we passed everything we'd found out onto the relevant authorities.

I agree that it would have been much easier to make our case if an invoice was provided for the £1,000 prior to giving consent, but unfortunately no such documentation was provided as they were informed that a receipt was not possible when setting up recurring payments.

Does the lack of documentation really mean that no protection can be sought from the PSRs? For the record, the Bank's response to our request for a refund under this section was simply a refusal on the basis that the transaction was authorised (despite the whole point of the section being to inform when an authorised payment should be refunded).