House of Lords to rule in relation to credit card refunds : Credit Card Guide

House of Lords to rule in relation to credit card refunds

The House of Lords is to make a decision with regards to credit card refunds for customers when they use their cards to make purchases abroad and goods are either damaged or not delivered at all.

Under the Consumer Credit Act the same level of protection applies as when goods are purchased in the UK, which means that customers are protected on purchases of between £100 and £30,000. However, this is being challenged by UK banks, with Lloyds TSB leading the argument against this level of protection on goods that are purchased from other countries.

There have already been High Court and Appeal Court hearings over this issue, and the banks are now asking for a final decision from the House of Lords. Banks claim that the system is unfair, and that they are being used as insurers for millions of suppliers around the world about which they actually know nothing.

Section 75 of the Consumer Credit Act, which came into force in 1974, states that credit card companies are responsible, along with the supplier, if goods bought on the card are damaged or not delivered. However, according to some industry officials there is confusion when it comes to goods that are purchased from another country, whether this is in person or via the Internet.

One official from the British Banker's Association stated: "Clearly it is far more difficult for the lender, who can obtain redress in turn from the supplier, on the borrower's behalf effectively, to do that overseas."

One legal expert added: "More and more people are discovering those rights, and more and more credit card companies are becoming a little more worried about fraudulent clams."

Tom Smith
9th October 2007

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