Ruling on credit cards offers more peace of mind

Published on 12/11/2007 00:18

Q: I UNDERSTAND that I get a degree of protection by using my credit card for purchases, but what sort of protection exists when I make purchases abroad? Do the same rules apply? How do I go about claiming money back if I don't receive a product or a service from a company in another country?

Ian Stirling, Dundee

A: BRITISH consumers will continue to be protected when buying goods overseas with their credit cards following a recent ruling by the House of Lords.

The ruling confirms that section 75 of the Consumer Credit Act 1974 applies to overseas as well as domestic transactions, bringing to an end a legal process initiated by the Office of Fair Trading (OFT) in 2004.

The Lords' ruling rejects an appeal by high street banks against a similar judgment by the Court of Appeal and confirms credit card issuers are individually and also jointly liable with suppliers if a consumer has a valid claim against the supplier for misrepresentation or breach of contract.

This applies to overseas purchases where the price is above 100 but no more than 30,000.

As a result, cardholders are able to make a claim against the credit card issuer as well as, or instead of, the supplier.

Section 75 covers foreign transactions, including where:

• a consumer uses a UK credit card to buy goods or services while abroad

• a consumer orders goods or services from a foreign supplier while abroad for delivery into the UK

• a consumer in the UK buys goods or services from overseas by telephone, mail order or over the internet which are delivered to a UK address

• 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 the contract is not completed in the UK.

John Fingleton, the chief executive of the OFT, said: "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."

The consumer protection afforded by Section 75 allows for the possibility of money that seemed lost on a credit card purchase being claimed back. If you pay by credit card, you can claim your money back from the credit card company if the seller fails to honour the contract, if the item is faulty, 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 - the credit card company is individually liable.

If you are buying an item costing more than 100 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.

If using your credit card abroad, you will need to work out whether the purchase price amounts to more than the sterling equivalent of 100 and less than 30,000.