No more UK credit card protection

Started by Newshound, November 28, 2004, 20:41:21

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The High Court in London has ruled that while protection given the public by Section 75 of the Consumer Credit Act 1974 does apply to domestic credit card transactions, it does NOT apply to overseas purchases.

The decision has major ramifications for UK consumers using a credit card to buy timeshare - or a holiday club membership -- abroad. The Office of Fair Trading (OFT), an independent government agency, is considering an appeal against the 'overseas' ruling.

Section 75 provides that for domestic credit card purchases with a cash price above £100 and not more than £30,000, the consumer is entitled to claim from the lender if things go wrong, namely, if the supplier breaches the contract or if there is misrepresentation.

The application of Section 75 to four-party, credit card transactions and overseas transactions has long been uncertain. The OFT sought to resolve the issue by way of a Court declaration.**

When a customer purchases goods or services using a credit card, there are typically four parties involved: 1) The cardholder, 2) The retailer, 3) The bank that issued the card, and 4) The bank acting on behalf of the retailer. Domestic transactions account for over 90 per cent of credit card spending by UK consumers -- in 2003 this amounted to more than £105 billion.

The majority of credit card purchases in EU states is made by UK consumers.

** A declaration is where a judge makes a ruling on a point of law that is the subject of disputed interpretation.

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