uSwitch.com: Section 75 of the Consumer Credit Act

Mike Naylor, personal finance expert at uSwitch.com, comments on the decision today by the House of Lords to uphold Section 75 of the Consumer Credit Act 1974 (S.75), which protects credit card purchases made overseas.

Section 75 of the Consumer Credit Act 1974 has been in existence for more than 30 years. It protects consumers making credit card purchases in the UK and overseas for between £100 and £30,000.

The judgment today by the House of Lords rejected an appeal by three major credit card companies that asked for overseas protection for consumers to be revoked. The protection covers consumers in such events as a company going bust, providing faulty goods or failure to send goods back to the UK. S.75 makes card companies jointly liable with retailers against breach of contract or misrepresentation.

“Today’s decision by the House of Lords is great news for consumers. This landmark decision has finally laid to rest the issue over credit card protection for overseas transactions which has been rumbling on with credit card suppliers for several years. UK consumers spent £16.4 billion abroad last year on credit and debit card transactions so the protection offered by S.75 on credit cards is invaluable. It would have been a kick in the teeth for consumers if the House of Lords had taken this away. The decision to uphold it means that wherever in the world consumers use their credit card, they can enjoy the same protection as they do in the UK. This is especially important with the growth of internet shopping where goods are often shipped to the UK from sites based overseas.

“Credit card companies will probably feel ‘hard done by’ following today’s judgement. This is completely unfounded as the vast majority of providers already impose foreign exchange rate loadings of around 2.65% or 2.75% for those using their credit card abroad. We believe this more than covers the costs incurred by the provider. With consumers already paying this premium to use their credit card overseas, arguably they are indirectly funding the extra protection offered and any claims that are made.

Naylor concludes: “My advice to consumers buying goods abroad worth more than £100 and less than £30,000 is to use a credit card so they can enjoy the extra security and protection offered by S.75. Unfortunately, this doesn’t extend to debit card transactions so consumers need to make sure they don’t get stung if the goods they have purchased are not as they were described or not delivered.”