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5 November 2007
The House of Lords has recently upheld a decision made by the Appeal Court earlier this year in relation to credit card protection on purchases and services made abroad by credit card users.
Credit cards offer protection to consumers when they use the card to make purchases within the UK and the goods are damaged or not delivered. However, the issue of whether this protection extended to services and goods purchased from abroad has been a grey area for some time.
However, the House of Lords' decision means that there is now clarification on this issue, which is good news for consumers but has caused disappointment in the credit card industry.
Credit card companies had been disputing their responsibility to provide refunds on services and products purchased from abroad if they were faulty or not delivered, and an appeal was launched by Tesco Personal Finance and Lloyds TSB.
However, the House of Lords has determined that under the Consumer Credit Act Section 75 credit card companies must be jointly liable with the supplier.
Purchases between £100 and £30,000 will be insured by the credit card company following the ruling. Having upheld the earlier decision made by the Appeal Court the House of Lords stated that there were no territorial limitations set out in the Consumer Credit Act, and no mention of goods or services purchased abroad not being covered under Section 75.
The House of Lords therefore ruled that credit card companies must take joint responsibility with the supplier.
Speaking about the ruling an official from the Office of Fair Trading stated: "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."
Although banks are disappointed with the ruling, one APACS official stated that it at least meant that the issue was no longer a grey area. She said: "At long last we have clarity. The banks now know where they stand and there is no doubt it is good for consumers."
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