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Press releases 2002 -

Protection for credit card holders when they shop abroad

PN 60/02    19 September 2002

Three credit card companies have confirmed that consumer safeguards on credit card purchases will apply to purchases made abroad as well as in the UK.

HSBC, Bank of Scotland and Sainsbury's Bank have assured the OFT that they will honour valid claims for purchases made abroad under Section 75 of the Consumer Credit Act 1974.

Section 75 sets out the concept of 'equal liability'. The law says that card issuers are jointly liable with suppliers if the consumer has a valid claim for misrepresentation and/or breach of contract by the supplier but only if the cash price of an item is between £100 and £30,000 and the credit limit is no more than £25,000. Cardholders, therefore, may be able to make a claim against the credit card company if they discover problems with goods or services purchased with their credit card. The OFT's view is that overseas as well as domestic transactions are covered by Section 75.

The three companies have now confirmed that they will not differentiate between claims based on where a purchase is made and that they will deal with claims consistently. Previously cardholders were told that Section 75 protection did not extend to overseas transactions although in some cases ex gratia payments were made up to the value of the credit advanced.

John Vickers, Director General of Fair Trading, said: 'Cardholders of these three companies can now shop abroad with greater confidence and I warmly welcome the assurances. We are currently talking to other credit card companies and I urge them to offer equal protection to their customers, as we believe the law requires.'

The banks were approached using the OFT's powers under the Stop Now Regulations 2001, although agreement was reached by negotiation rather than the formal exercise of those powers.


1. The effect of Section 75 of the Consumer Credit Act 1974 is that when a lender provides credit to finance a purchase from a separate supplier and has pre-existing or contemplated future arrangements with that supplier, the lender is equally liable with the supplier for any breach of contract or misrepresentation if all of the following conditions are met:

  • the cash price of the item is over £100 but not more than £30,000
  • the credit agreement is regulated, ie generally where not more than £25,000 of credit is advanced to an individual (includes sole traders, partnerships and unincorporated bodies)
  • the creditor is in the business of granting credit and the agreement is made in the course of that business
  • the credit is advanced under the arrangements between the credit grantor and the supplier, so that a bank overdraft arranged by an individual to pay for an item is not covered.

2. Section 75 does not cover debit or charge cards. Click here for more information on the Consumer Credit Act

3. Under the Stop Now Regulations, before taking court action the OFT is required to consult with companies or traders it believes to be in breach or threatening to breach a number of laws harming the collective interests of consumers covered by those laws. It can seek written assurances in lieu of court action.

4. The Stop Now Regulations cover the following areas: doorstep selling, timeshare, unfair contract terms, consumer credit, distance selling, package travel, package holidays and package tours, misleading and comparative advertising, sale of goods rights, TV broadcasting activities and advertising of medicinal products for human use. 

5. In this press release the functions of the Director General of Fair Trading (DGFT) under the Act and the Regulations are for simplicity described as the functions of 'the OFT'. The Enterprise Bill proposes to replace the office of the DGFT with the OFT, to which would be transferred the DGFT's functions.

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