House of Lords dismisses card refund appeal for purchases abroad

Lloyds TSB, Tesco Personal Finance and American Express have had their challenge to the application of the Consumer Credit Act dismissed by the House of Lords.

The companies went to the House of Lords in an attempt to overturn a major piece of legislation designed to protect consumers.

The credit card providers argued that section 75 of the Consumer Credit Act should not apply to purchases made abroad. Section 75 says credit card purchases between £100 and £30,000 are insured by the card issuing companies and the House of Lords decision means that if there is a problem with an item or service bought abroad on a credit card, the card issuer can be held liable, along with the supplier of the goods or services, where the purchase is worth more than £100 but less than £30,000.

The card firms argued they were being placed in the position of insurers for possibly millions of foreign suppliers. "This legislation was drafted in 1974 when few card purchases were made abroad," a Lloyds TSB spokeswoman said. "Now there are millions each year."

The decision upholds the Court of Appeal ruling against the providers made in 2006.

John Fingleton, chief executive of the Office of Fair Trading (OFT) commented "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".

Sandra Quinn from card services organisation Apacs, said "at long last we have clarity, the banks now know where they stand and there is no doubt it is good for consumers."