Card companies lose their case

The House of Lords has delivered disappointing news to credit card companies in the UK, after it reached a decision with regards to whether card companies are liable in cases where a customer uses their card to purchase goods or services from abroad, and the goods are damaged or not delivered.

This is an issue that has been causing confusion for some time, but the ruling by the House of Lords has finally brought clarification that spells good news for consumers and bad news for credit card companies.

Consumers that use their credit cards to purchase goods and services within the UK have always been protected. However, the issue of whether goods and services purchased abroad were also protected has been a grey area for some time.

The House of Lords stated that there was nothing in the Consumer Credit Act to say that there were any territorial limits with regards to how far this protection extended, and there was nothing in the Act to state that foreign purchases would not be protected.

An official from the Office of Fair Trading spoke of the decision made by the House of Lords, stating: "It confirms that credit card issuers are individually and jointly liable with suppliers if a consumer has a valid claim against the supplier for misrepresentation or breach of contract."

He added: "The application of section 75 to overseas credit card purchases has long been uncertain, which is unsatisfactory for UK consumers. We are pleased that the House of Lords has resolved the issue, and particularly happy that it has been resolved in a way that gives greater protection to consumers."

Sandra Quinn from APACS also commented, stating: "At long last we have clarity. The banks now know where they stand and there is no doubt it is good for consumers."

Tom Smith
5th November 2007