Credit card companies appeal against foreign purchases ruling

04 October 2007
A number of banks, led by Lloyds TSB, are appealing against a law which states that UK credit card companies are liable for damaged or undelivered goods purchased overseas in the same way as they are for UK-bought products.

The hearing, which is an appeal against an earlier decision that section 75 of the Consumer Credit Act 1974 applies to overseas transactions, is taking place at the House of Lords.

As it stands, credit card lenders are jointly liable with overseas suppliers for goods worth between £100 and £30,000 in cases where it can be proved that misrepresentation or breach of contract by the supplier has taken place.

Therefore, customers can claim against the card issuer as well as or instead of the product vendor.

The companies affected are claiming that it is unfair that they should effectively being insuring purchases from companies about which they may know nothing. They also suggest it can be far more difficult to obtain funds from the overseas supplier in turn for refunds it must offer UK customers.

The new judgement will clarify the repercussions of section 75 on transactions when a consumer uses a UK credit card to purchase items while abroad and when a buyer orders goods from a foreign supplier while abroad for delivery into the UK.

It will also rule on deals made by a consumer in the UK buying goods for delivery to a UK address from overseas and in cases where there are face-to-face pre-contract dealings with a foreign supplier temporarily in the UK, or with a UK agent of a foreign supplier, but where the contract is not completed in the UK.

A decision is expected to follow shortly after the two-day hearing, which will end October 4.

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