| Section 75 of the Consumer Credit Act says that credit card providers are jointly liable with suppliers if a consumer has a valid claim for misrepresentation and/or breach of contract. There had long been confusion about whether this applied to transactions made abroad. When the matter was taken to court in an attempt to clarify the legal position, the first instance court decision was that section 75 did not apply to foreign transactions. Shortly afterwards, the Office of Fair Trading said
it would appeal the decision.
A number of large card-issuers decided to continue applying the old (voluntary) policy to credit card transactions abroad. This meant that if the issuers were satisfied there had been a breach of contract or misrepresentation by the supplier, they would reimburse the customer – but only to the extent of the amount of credit used. This differed from the provisions of section 75, where compensation could be claimed for all the loss caused by a breach of contract
or misrepresentation.
We regarded this continued application
of the voluntary policy as representing
good industry practice, and have taken
that into account when considering cases brought to us.
The Court of Appeal has now overturned
the earlier court decision and decided
that section 75 does apply to foreign transactions. So the current state of the
law is that no differentiation should be
made between UK and foreign credit transactions when applying the provisions
of section 75. As the law is one of the things we must take into account when considering complaints, we now expect card-issuers to apply the new law where we uphold a complaint of this type.
Because we operate an informal dispute-resolution service, complaints about transactions made abroad can sometimes present difficulties of evidence that mean we are unable properly to decide them. The recent court decision does not make any difference to that. It is also important to remember that the court decision does not mean the consumer is now automatically entitled to a refund from the credit provider for a foreign transaction. Section 75 only applies where there has been a breach of contract or misrepresentation.
We will not be re-opening old cases
where there has already been a full and final settlement, or which we have determined under the previous law which was applicable at the time.
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