Chances are you bought at least a few Christmas presents on Amazon.co.uk this year.  Indeed, Amazon revealed record Christmas takings of $21 billion.   As the business of buying shifts from the high streets to online, Amazon.co.uk has become an increasingly large presence in the life of the consumer.  As part of this growth, Amazon.co.uk recently introduced Amazon.co.uk Marketplace, a virtual market which allows consumers to purchase new, used, collectable and refurbished items directly from the supplier using Amazon.co.uk's existing infrastructure.  In particular, Amazon.co.uk highlights the secure payment system, where the consumer's credit card details are never released to an unknown third party.  Amazon.co.uk acts as an intermediary between the consumer and the supplier, processing the payment from the credit card and then releasing the payment to the supplier upon completion of the order.

Security of payment, however, may have unintended consequences.  For over thirty years, consumers purchasing an item of significant value have been able to hold the creditor (usually the credit card company) jointly liable for any breach of the supplier, for example a failure of delivery or defect in the item.  This right is contained in section 75 of the Consumer Credit Act 1974 and protects purchases between £100 and £30,000 in value.  There is no time limit on submitting a section 75 claim to the creditor or Financial Ombudsman but, should the consumer wish to take the matter to court, the claim must be within the statutory limitation period of six years.

The section 75 rights arise from the three-party nature of the typical credit card transaction, with the interconnecting relationships among the consumer, creditor and supplier.  Through processing the consumer's payment on Amazon.co.uk Marketplace, however, Amazon.co.uk steps in between the creditor and the supplier and disrupts this traditional three-party agreement structure.  In light of this, credit card companies funding Amazon.co.uk Marketplace transactions have recently refused to step into the shoes of defaulting suppliers and accept liability under section 75. 

Creditors argue that Amazon.co.uk has instead created a four-party agreement, in essence severing the joint liability between the creditor and the supplier.  The Financial Ombudsmen seems to agree.

But in setting up these arrangements, has Amazon.co.uk breached other consumer protection legislation?  For example, the Unfair Terms in Consumer Contracts Regulations 1999?  The Regulations define a potentially unfair term as follows: 'a contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.'

The Regulations provide as an example a term which has the object or effect of inappropriately excluding or limiting the legal rights of the consumer vis-à-vis the seller or supplier or another party.  While payment terms presented by Amazon.co.uk on Amazon.co.uk Marketplace do not explicitly exclude the section 75 rights of the consumer, they do have that effect – and to the detriment of the consumer. 

For the time being, however, Amazon.co.uk remains silent on the fact that consumers surrender their section 75 rights through the use of Amazon.co.uk Marketplace.  Although Amazon.co.uk does clearly state that the relationship on Amazon.co.uk Marketplace is directly between the consumer and the supplier, Amazon.co.uk actively discourages contacting the suppliers directly.  Amazon.co.uk reassures consumers that, through Amazon.co.uk Marketplace, their purchases may be covered by the A-Z Safe Buying Guarantee.  This guarantee, however, only allows the consumer to claim against the supplier within 90 days of the order date.  A far cry, indeed, from the wider protection of section 75. 

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