Credit card purchases abroad not covered by Section 75

In a landmark case, the High Court has ruled that credit cards used overseas do not enjoy the same consumer protection rights under Section 75 of the Consumer Credit Act.

Section 75 includes consumer protection measures which give consumers the right to recover various costs from the credit card issuer.

Section 75 of the Consumer Credit Act states that if you pay by credit card you can claim your money back from the card company if the seller fails to honour the contract, or the item is faulty or if the seller wrongly describes it or if the supplier goes out of business with your money before the item is delivered.

The law applies only if the purchase is more than £100 and no more than £30,000. It does not apply to debit cards or charge cards.

The Office of Fair Trading took the matter to court because it believes the safeguards apply to card transactions anywhere in the world. Its view was challenged by Lloyds TSB, Tesco Personal Finance and American Express Europe who were concerned about rising costs and, in particular, the prospect of secondary litigation and personal injury claims.

The National Consumer Council (NCC) described the verdict as a blow for consumers. NCC head of policy, Jill Johnstone, said: 'This is a backwards step for consumer protection. People in the UK are heavy credit card users and, with more and more of us travelling abroad, Section 75 gave an extra safeguard and boosted confidence.'

The future of Section 75 for transactions made in the UK - not only overseas is also under threat, because of a draft European consumer credit directive.

The directive will eventually replace part of UK consumer credit law, and could be the beginning of the end of Section 75 in the UK.