Section 75 how do the cc companies manage the loss?

[Tweety1]

Just this really... they must be hit really hard when this amount of people claim but even just normal claims how do they afford this protection. It’s not like we pay for it. Im just curious!

[400ixl]

Every person in the world who does not settle their bill at the end of each month (or is on a zero & deal) pays them.

They will also be claiming things back from suppliers as well where possible.

Its the same way they cover themselves for the cost of CC fraud.

So as with many things, the less well off (those in debt to them) pay for it.

[duncanb]

Hard to add anything else.

[passingthrew]

and there are also credit card fees with some items. not sure if this goes to the retailer or credit card company though

[gforce_iom]

The bankers for the companies will also hold some form of security for chargeback situations...especially for travel companies who very often have large amounts of cash upfront of travel dates.

So, in the case of Thomas Cook, it is very likely their bankers will hold a % of their annual card turnover in cash security to cover the situation that has unfolded over the last couple of days.

[ERICSMUM]

Originally Posted by gforce_iom

The bankers for the companies will also hold some form of security for chargeback situations...especially for travel companies who very often have large amounts of cash upfront of travel dates.

So, in the case of Thomas Cook, it is very likely their bankers will hold a % of their annual card turnover in cash security to cover the situation that has unfolded over the last couple of days.

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Would this be ring-fenced so it can’t be used by the administrators when calculating TCs assets ?

[gforce_iom]

Originally Posted by ERICSMUM

Would this be ring-fenced so it can’t be used by the administrators when calculating TCs assets ?

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Very likely to be ring fenced... most banks would have the cash formally charged as cash security for the likely chargeback liability... so they can just use the cash if the situation arose where chargebacks in large numbers occur.

Ordinarily during normal trading, if chargebacks occur due to fraud or other normal trading conditions, they would just be netted off against trading receipts ... where there are no trading receipts to net off against they they would call on the cash security.

The cash security would ordinarily be held in a separate cash security account “xxx bank plc re Thomas Cook plc” for example... so its the banks account with the customers money in it... with a formal charge document executed.

It was this cash security requirement that contributed to the demise of some other travel firms/airlines in the past... because it sucked up too much of their cash flow!

[Vanillapod]

The retailer generally takes the hit. Obviously not in cases like Thomas Cook.
When we have any fraudulent transactions the money is taken from us and there’s nothing we can do about it!
I expect the same happens for faulty goods and any transactions that are challenged

[YorkshireT]

Credit card companies were holding a lot- TC was pleading with them yesterday to release 50m to them. Needless to say they said no.

[Tweety1]

Thanks everyone the Dibb is a mind of information