| Good News for Consumers – Using Credit Cards Abroad | 31st Dec 2008 |
Under Section 75 of the Consumer Credit Act 1974 credit card companies and suppliers are jointly and severally liable for breach of contract or misrepresentation. This means that you can ask your credit card company for your money back if you have purchased unsatisfactory goods or receive unsatisfactory service having paid for it on your credit card. Following a Court of Appeal ruling on 22nd March 2006, Section 75 which was formerly only believed to apply to transactions taking place within the UK was found to be effective for transactions taking place abroad.
The era of traveller’s cheques is now long gone with most people using their credit card to purchase goods and pay hotel or car hire bills. The Court of Appeal ruled that consumers who use their credit cards abroad to purchase goods or services should be entitled to the same protection they enjoy in the UK. This means that if we purchase a defective product abroad or stay in a hotel which turns out to be below-par, we will be entitled to look to our credit card companies for reimbursement. The value must be between £100 and £30,000 so this could include anything from an mp3 player to the purchase of a time-share.
The appeal was made by the Office of Fair Trading against a decision made by the High Court in favour of three well known credit card companies, Lloyds TSB, Tesco Personal Finance and American Express. The credit card companies’ argued that they should not be the insurance company of retailers and hoteliers throughout the world. It is worth noting, however, that Britons spend somewhere in the region of £10.5 billion a year on credit card purchases abroad and £344 million on credit card charges for using the card abroad and you could say that this entitles card users to the right to some protection.
There is no doubt that the credit card companies will face difficulties in seeking to enforce claims against foreign suppliers however the Court of Appeal stated that though this may be true, it would not have been Parliament’s intention in drafting the Act to exclude transactions taking place abroad. In any event, though enforcing claims abroad may be more difficult than doing so in the UK, there is no evidence to suggest that this should be unmanageable.
The internet has facilitated the purchasing of goods and services abroad and it only seems right that consumers should have the choice of entering into transactions anywhere in the global market.
Please note however that although the Court of Appeal have refused the credit card companies’ permission to appeal to the House of Lords, they will no doubt seek determination from the House of Lords due to the implications this judgment has for the industry.
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