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GRIPT INVESTIGATION: BOI Payments Service accused of misleading clients

Small firm told they're liable for €10,000

BOI Payments Acceptance, a company providing payment services to merchants, has been accused of falsely representing their services to potential customers, after a small firm was told it was liable for a €10,000 fraud when a customer used stolen credit cards – a process called chargebacks.

BOIPA describes itself as a marketing alliance between the Bank of Ireland and Evo payments. The firm says that BOIPA sold them the card payment services as safe and designed to accept ‘over the phone payments’.

An investigation by Gript showed that when we posed as a potential client, a BOIPA representative did, in fact, repeatedly tell us we would not be liable in case of chargebacks.

A company called Melvin Coal in Fermanagh made the complaint after being informed by BOIPA that Melvin Coal owed BOIPA nearly €10,000 euro after a bank card was fraudulently used to purchase goods from Melvin Coal. Melvin Coal had taken an order over the phone, which is a service BOIPA offers and which they had authorised Melvin Coal to make use of, but it was later claimed that the card used to pay for the material had been fraudulently used. By that point the goods had already been picked up and Melvin Coal found themselves out thousands of euro.

Melvin Coal told Gript that “When we were sold these card processing facilities, we were assured many times over that it was ‘safer than cash’ and that ‘over the phone payments’ was one of the ‘main benefits’ of using the BOIPA/EVO systems.” They say that they’ve now discovered “we were supposed to be bound to terms which were in complete contradiction to the assurances given when the product was being sold to us.” Melvin Coal told Gript that the situation was “simply wrong” and that “BOIPA/EVO wish to reap all of the financial benefits, but lumber their customers with ALL of the responsibility and risk – how is that logical, or legal?”

Gript reviewed the contract which Melvin Coal has with BOIPA, and found that it contains a provision, Section 4.1, which states, “You will be fully liable for all Chargebacks (irrespective of the grounds for such Chargebacks). You will pay BOIPA on demand the full amount of all Chargebacks and any related amounts.”

Whilst this clause appears to be an industry standard, as variants of it were found in all of the contracts we examined from similar firms, Melvin Coal claim that this provision was never mentioned or explained to them, and that they had been actively misinformed about the potential liability they were agreeing to take on if they signed on with BOIPA. Melvin Coal told Gript that they had been told by BOIPA that their system was “safer than cash” and that they never would have signed up to BOIPA’s services if they had known that the contract BOIPA would provide them with shifted all of the liability of chargebacks onto them.

Neil McDonnell, the Chief Executive of ISME, told Gript that “ISME would be greatly concerned if SMEs were to be liable for chargebacks because of fraudulent use of bank cards by known customers. This would seriously undermine the confidence of SMEs in migrating to cashless platforms. We note also that many SMEs are protected by the Consumer Protection Code in their dealings with banks. Any clauses in bank contracts relating to SME liability of chargebacks must be explicitly clear, easy to understand, and simple to find in contractual documentation.”

In an attempt to verify the claims of Melvin Coal Gript had a number of discussions with BOIPA’s sales team. In those discussions we presented ourselves as a potential customer of the firm who was concerned with the risk of losing money if chargebacks occoured following fraudulent card transactions.

BOIPA representatives repeatedly told us that we would not be liable in the case of chargebacks, and that there was an element of risk sharing as they would conduct a risk assessment of our business before beginning to work with us. They told us, when told we were worried that we could be financially hit if such a situation ever arose, that “we’ve taken you on as a client so it’s not going to be you who is liable for it.” At no point in our conversations did any of the BOIPA representatives inform us of the existence of a clause which meant we would be entirely liable for chargebacks if we used BOIPA’s service.

Bank of Ireland told Gript that they could not comment on this situation with BOIPA as “BOIPA is not part of the Bank of Ireland Group.” Whilst this is true BOIPA is described as a “marketing alliance” between EVO Payments International GmbH and the Bank of Ireland, and BOIPA’s logo is clearly a derivative of BOI’s logo, and so it would seem fair for Bank of Ireland to have an interest in the conduct of BOIPA.

We reached out to BOIPA multiple times, both when we initially heard Melvin Coal’s complaint, and again later when it appeared that BOIPA representatives had misled us about the terms of the service. We informed both Barry Gray, the Marketing Director of BOIPA, and Conor Quirke, BOIPA’s General Manager, that we had had discussions with BOIPA representatives who had “repeatedly made statements about risk sharing and liability in relation to charge-backs which appear to be untrue,” and that these representatives had, despite multiple statements that we were concerned about chargebacks, failed to inform Gript of Section 4.1. We said that this “would seem to be in line with the claims by Melvin Coal that BOIPA’s services are being mis-sold and that BOIPA has engaged in misleading sales practices, to whatever degree.” Both Mr Gray and Mr Quirke were asked if they could provide any explanation which would explain the situation, but Mr Gray stated BOIPA would not be commenting on the situation, and Mr Quirke did not respond at all.

Whilst Mr Quirke did not respond to our queries he did respond to Melvin Coal after they sent BOIPA a letter which argued BOIPA’s actions were “in complete contradiction to the assurances given when the product was being sold to us.” Mr Quirke responded by telling Melvin Coal that “We take allegations of misrepresentation and fraud extremely seriously. Please forward any evidence of the above and we will thoroughly investigate it as a matter of urgency.” He then informed Melvin Coal that if they failed to pay BOIPA €7,218 within 10 days, BOIPA would “reserve the right to instruct our solicitors to institute debt recovery proceedings… We will use the content of this letter to fix your Client with costs of same and such proceedings may affect the creditworthiness of your Client.”

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