Section 75 appeal in the House of Lords

139/07 2 October 2007

Credit card issuers will today appear at the House of Lords to appeal the Court of Appeal judgment that section 75 of the Consumer Credit Act 1974 applies to overseas transactions.

The Court of Appeal judgment in March last year confirmed the OFT's view that credit card issuers are jointly liable with overseas suppliers if the consumer has a valid claim for misrepresentation or breach of contract by the supplier where the price of the purchase is above £100 but no more than £30,000.

Consumers are, therefore, currently able to make a claim against the credit card issuer as well as or instead of the overseas supplier.

The House of Lords judgment will clarify whether section 75 covers foreign transactions including where:

a consumer uses a UK credit card to buy goods while abroad
a consumer orders goods from a foreign supplier while abroad for delivery into the UK
a consumer in the UK buys goods which are delivered to a UK address from overseas by telephone, mail order or over the internet
there is face-to-face pre-contract dealings with a foreign supplier temporarily in the UK, or with a UK agent of a foreign supplier, but the contract is not completed in the UK.

The hearing is expected to last two days and a judgment will be handed down in due course.

NOTES

1. The OFT sought to resolve the issue of the application of section 75 to overseas as well as domestic transactions by way of a Court declaration (see press release 82/03). The OFT's position that the concept of 'equal liability' of card issuers and suppliers does apply was disputed by Lloyds TSB Bank plc, Tesco Personal Finance Ltd (part of The Royal Bank of Scotland group) and American Express Services Europe Limited. The High Court ruled in November 2004 that section 75 applied to domestic credit card transactions only (see press release 186/04). That protection was extended by the Court of Appeal to overseas transactions on 22 March 2006.

2. UK consumers spent almost £123 billion on domestic credit card transactions in 2004, and a further £12.5 billion on overseas transactions. Figures given by APACS (the UK payments association) for 2004.

3. Section 75(1) states that card issuers are jointly and severally liable for any misrepresentation or breach of contract in relation to a transaction with a cash price of £100 to £30,000 which is financed by an agreement regulated by the Consumer Credit Act 1974.

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