23 March 2006
Goods bought overseas using a credit card will be covered by the card's guarantee, a UK court has ruled.
The Court of Appeal decision overturns an earlier verdict from November 2004, when a group of credit card companies successfully argued that section 75 of the Consumer Credit Act should not be applicable to goods and services purchased outside the UK.
Section 75 of the Consumer Credit Act dictates that consumers can claim from their card provider if goods are unsatisfactory.
The Office of Fair Trading then launched an appeal and the court ruled that all overseas transactions of between £100 and £30,000 would be covered by section 75.
Lloyds TSB, one of the card issuers who launched the original legal case, said it was "disappointed" by the verdict.
"We are disappointed in this decision because, as a point of principle, we do not believe 'connected lender liability' should apply to foreign credit card transactions," it argued.
"This ruling means that a credit card customer can, for example, make a purchase abroad for £30,000, put just £1 of the purchase price on their credit card and then claim against the credit card company for millions of pounds in consequential losses."
It said that the original case had not been aimed at "reducing consumer protection", but rather "to gain legal clarity over this complex principal".
The company said that it was now considering taking the case to the House of Lords.
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