The Consumer Credit Act allows shoppers to claim
refunds from credit card issuers if they encounter problems with
goods purchased using a card.
Section 75 of that law says that the card issuer is liable as
well as the supplier of goods in cases of misrepresentation or
breach of contract. It covers goods of between £100 and £30,000 in
value, though it only covers up to £25,000 of losses.
Credit card issuers argue that this should not be the case with
overseas purchases, but the Office of Fair Trading (OFT) has won a
case in court ruling that it does apply to foreign buys.
The House of Lords has been hearing arguments this week in an
appeal against the OFT's court victory. Experts say that an
overturning of that decision could knock confidence in internet
shopping from foreign suppliers. The Lords will not immediately
publish a decision.
"The Court of Appeal judgment in March last year confirmed the
OFT's view that credit card issuers are jointly liable with
overseas 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 £100 but no more than £30,000," said
an OFT statement. "Consumers are, therefore, currently able to make
a claim against the credit card issuer as well as or instead of the
overseas supplier."
The association which represents payment and credit card firms,
APACS, said that the use of the law to protect all foreign
purchases was flawed.
"Section 75 was written for hire purchase agreements and was not
designed to cover credit cards or the extensive way we now use
them," said APACS director of communications Sandra Quinn. "This
current case tests the validity of an interpretation by the Court
of Appeal, which gives card issuers an open-ended liability to
provide insurance for customers, not only for the amount of a
transaction undertaken abroad but also for any consequential
loss."
"Pending a decision card companies will continue to meet their
legal obligations to honour these section 75 claims but the
industry looks forward to having clarification of the law which has
been unclear for far too long," said Quinn.
In 2004 the OFT asked the High Court to clarify once and for all
whether the law applied to overseas purchases. The High Court said
that it did not. The Appeals Court, though, reversed that
decision.
"There is nothing in section 75(1) or (2) that provides for a
distinction to be drawn between transactions entered into in this
country and transactions entered into abroad, to say nothing of
transactions entered into on the internet, the place of which may
be quite difficult to determine,” said Lord Justice Waller in that
ruling.
A judgment from the House of Lords usually follows six to eight
weeks after the case has been heard.
