Feeds

Law Lords back protection for credit card purchases abroad

Status quo preserved, peace reigns

Secure remote control for conventional and virtual desktops

The House of Lords has supported the overturning of an earlier court decision that could have damaged confidence in ecommerce. The Lords ruled against Lloyds TSB, Tesco Personal Finance and American Express on Wednesday (Oct 31).

Consumers will still be able to claim refunds on goods from credit card companies even if their purchase was made abroad, the House of Lords has said.

Section 75 of the Consumer Credit Act allows people to claim refunds from their credit card issuer as well as the seller of the goods if they have been misrepresented or if there has been a breach of contract.

The current case began in 2004 when the Office of Fair Trading (OFT) asked the courts to rule once and for all on whether section 75 applied to goods bought overseas. The High Court said it did not, ruling in favour of Lloyds TSB and others, but the OFT appealed and won.

The House of Lords has backed the Court of Appeal's ruling. That could cost the credit card industry significant sums, but the OFT has welcomed the decision.

"The application of section 75 to overseas credit card purchases has long been uncertain, which is unsatisfactory for UK consumers," said John Fingleton, chief executive of the OFT. "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."

UK consumers spent £10 billion a year, according to the payment cards industry body APACS. That spending will be subject to the Section 75 rules as long as the sum spent is between £100 and £30,000.

Lloyds TSB said in a statement: "This ruling gives the clarification of the law we were seeking regarding the application of Section 75 of the Consumer Credit Act 1974 to foreign credit card transactions. We are disappointed with the decision as we have long believed that Section 75 has no validity in relation to foreign credit card transactions. However, given that the House of Lords has confirmed the Court of Appeal ruling, we will continue our policy of paying valid claims for overseas transactions."

APACS also welcomed the certainty that the ruling gives its members. "From a customer’s point of view, this decision means no change as card companies had been meeting valid overseas claims anyway," said Sandra Quinn, APACS' director of corporate communications. "Clearly the card industry will need to consider the implications of today’s ruling for their individual businesses."

Had the ruling gone the other way it could have dented confidence in ecommerce, which relies more heavily than off-line business on cross-border consumer trading.

The five law lords were unanimous in their decision. Lord Hoffmann, Lord Hope of Craighead, Lord Walker of Gestingthorpe, Lord Brown of Eaton-under-Heywood, and Lord Mance ruled in the case.

"There is nothing in the language of section 75(1) to exclude foreign transactions," said Lord Hoffman's ruling.

"The answer to the question whether the right of recourse under section 75(1) does extend to foreign transactions is to be found in the words of the statute, not in any presumption either way as to its application extraterritorially," said Lord Hope. "The words 'in relation to a transaction financed by the agreement' … are unqualified."

"They are to be understood as extending to whatever was in contemplation when the agreement between the debtor and the creditor was entered into. In 1974 the use of credit cards issued by United Kingdom providers for foreign transactions was limited to Barclaycard," he said. "I do not think that it can be said that Parliament did not envisage the possibility of transactions being entered into abroad, linked to the relationship between the issuer of the card and the cardholder, of the kind that is now commonplace."

See: The ruling

Copyright © 2007, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

Build a business case: developing custom apps

More from The Register

next story
Microsoft exits climate denier lobby group
ALEC will have to do without Redmond, it seems
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Kate Bush: Don't make me HAVE CONTACT with your iPHONE
Can't face sea of wobbling fondle implements. What happened to lighters, eh?
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.