UK consumers have had confirmed that an important protection is available to them when using a credit card following yesterday’s ruling by the Court of Appeal that section 75 of the Consumer Credit Act 1974 applies to overseas as well as domestic transactions.
Lord Justice Waller, Lady Justice Smith and Lord Justice Moore-Bick overturned a previous ruling by the High Court in November 2004 that section 75 did not apply to overseas purchases. Yesterday’s judgment followed the OFT’s appeal against the High Court decision. It confirms the OFT’s view that credit card issuers are individually as well as jointly liable with suppliers if the consumer has a valid claim for misrepresentation or breach of contract by the supplier where the price of the purchase is above GBP100 but no more than GBP30,000.
Cardholders are, therefore, able to make a claim against the credit card issuer as well as or instead of the supplier.
UK consumers spent almost GBP123 billion on domestic credit card transactions in 2004, and a further GBP12.5 billion on overseas transactions.
Section 75 covers foreign transactions including where:
* a consumer uses a UK credit card to buy goods while abroad
* a consumer orders goods from a foreign supplier while abroad for delivery into the UK
* a consumer in the UK buys goods which are delivered to a UK address from overseas by telephone, mail order or over the internet
* there is face-to-face pre-contract dealings with a foreign supplier temporarily in the UK, or with a UK agent of a foreign supplier, but the contract is not completed in the UK.
John Fingleton, OFT Chief Executive, said:
‘The application of section 75 to overseas credit card purchases has long been uncertain, and we are pleased that the Court of Appeal has been able to examine Parliament’s intention behind the legislation, and resolve the issue in favour of consumers and in a way which takes account of developments in the market.’
Tips for consumers on credit card purchases
* thanks to the consumer protection of section 75, money that seemed lost on a credit card purchase can be claimed back
* if you pay by credit card you can claim your money back from the card company if the seller fails to honour the contract, or the item is faulty or if the seller wrongly describes it or if the supplier goes out of business
* you do not have to attempt to claim your money back from the seller first ÃÂ¢ÃÂ the credit card company is individually liable
* if you are buying an item costing over GBP100 and you are asked for a deposit, consider paying the deposit by credit card
* you are not covered by section 75 if you use a debit or charge card.
1. The OFT sought to resolve the issue of the application of section 75 to overseas as well as domestic transactions by way of a Court declaration (see press release 82/03). The OFT’s position that the concept of ‘equal liability’ of card issuers and suppliers does apply was disputed by Lloyds TSB Bank plc, Tesco Personal Finance Ltd (part of The Royal Bank of Scotland group) and American Express Services Europe Limited. The High Court ruled in November 2004 that section 75 applied to domestic credit card transactions only (see press release 186/04). That protection was yesterday extended by the Court of Appeal to overseas transactions.
2. Figures given by APACS (the UK payments association) for 2004.
3. Section 75(1) states that card issuers are jointly and severally liable for any misrepresentation or breach of contract in relation to a transaction with a cash price of GBP100 to GBP30,000 which is financed by an agreement regulated by the Consumer Credit Act 1974.