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PayPal paid me back but NatWest refuse to close the case - who's right?

I bought a caravan on E-bay for £3,500 in early September but it never arrived. I raised the problem with Natwest - the provider of the credit card that I used to pay - but they told us we'd need to apply under section 75 under "item not as described". That was fine with us because the item was wrongly described anyway but in the end the seller agreed to settle the problem through PayPal and we were refunded the money on the 4th of November.

However, now Natwest won't close the case and are saying that the seller's bank must get until 15th February to dispute the case. I don't see how this can be the case as the merchant was Paypal and they have refunded and closed the dispute. As I see it, Natwest are trying to time me out and charge the £3,500 back to me on the 15th of February - what should I do?
Alex, London

Emily Gorton Staff Writer 22 December 2009

NatWest are not entitled to stall the process by waiting for the seller's bank to enter the dispute since PayPal have closed the matter already. Section 75 does not cover payment through third parties; the law says that the credit card provider and the supplier must have a direct relationship. Since PayPal has been used for the payment, NatWest have no direct relationship with the seller or the seller's bank. Therefore, the dispute should stop at PayPal and NatWest do not need to take into account what the seller's bank decide to do as they are powerless in the situation.

If NatWest continue to dispute this, you can take the case to a financial ombudsmen, for free, who will resolve the matter and may even give you compensation for the distress caused. Read our full answer »