Law Lords support consumers on credit card insurance

by Gill Montia

Story link: Law Lords support consumers on credit card insurance

The House of Lords has ruled that credit card providers must continue to refund customers who purchase goods and services abroad that are not delivered, or are damaged.

Lloyds TSB and Tesco Personal Finance brought the case, which challenged the Consumer Credit Act.

However, an appeal against an original decision in the High Court has now been dismissed by five Law Lords.

Section 75 of the Consumer Credit Act states that credit card purchases between £100 and £30,000 are insured by the card issuing companies.

However, the application of section 75 to overseas credit card purchases has been an area of uncertainty and the ruling has now resolved the issue.

The Law Lords agreed that the 1974 Act gave no indication that there was any territorial limitation on the banks’ obligations.

Credit card providers will not be surprised at the outcome but will nevertheless be disappointed.

Their main concerns about the application of the Act centre on liabilities rather than goods that fail to be delivered or are damaged.

According to Sandra Quinn of Apacs, the payment services body, a credit card provider could find itself faced with consequential losses, such as being liable for all costs in the US that might arise out of a crash in a car hired with a credit card payment.