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House of Lords hears card cover appeal

Banks bid to end credit card protection abroad


Signing a credit card slip

Credit card companies have gone to the House of Lords to try to overturn a ruling which gives British shoppers protection when they use their credit cards abroad.

The action concerns Section 75 of the Consumer Credit Act. Under this, you can claim against either the shop or the credit card company if something goes wrong with goods or services you’ve bought on a credit card.

This protection – which covers goods and services costing between £100 and £30,000 – is particularly important if the seller goes bust.

But a High Court ruling in 2004 said the act didn’t apply when people made purchases abroad.

Court of Appeal

That ruling was overturned in March 2006 after the Office of Fair Trading applied to the Court of Appeal. The House of Lords judgment will now clarify whether section 75 covers foreign transactions.

The Lords hearing will also clarify the protection you get if you buy goods for delivery to the UK from overseas by telephone, mail order or over the internet.

The hearing, which began yesterday, is expected to last two days and a judgment will be handed down later.

Consumer Credit Act

Which? believes that section 75 of the Consumer Credit Act makes the credit card company jointly liable with the retailer for a breach of contract or misrepresentation, whether the card is used in the UK or overseas.

Which? Money Editor Martyn Hocking said: ‘Section 75 of the Consumer Credit Act offers vital protection to consumers buying big ticket items and it is particularly valuable when shopping abroad.

‘If you order goods on holiday and the company you are dealing with goes bust – or the goods turn to out to be sub-standard – it is next to impossible for the average consumer to seek redress directly. Knowing that you can turn instead to your credit card company for help is a huge comfort and if this option was taken away, it would be a big step backwards.

‘Using a credit card abroad is expensive enough already – most cards add a fee of 2% to 3 % on to every purchase you make – and consumers will find it hard to understand why they should pay more to use their credit card abroad if they are going to get less protection on holiday than they do when they are shopping in the UK.’

If you want to learn more about your rights under the Consumer Credit Act, visit our Consumer Rights website. 

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