OFT wins credit card cover appeal

The decision could have major fallout for credit card firm

The Court of Appeal has said credit card guarantees do cover items bought overseas, reversing an earlier ruling.

The decision backs an appeal by the Office of Fair Trading (OFT) concerning Section 75 of the Consumer Credit Act.

Under this rule, shoppers can claim against the card issuer if a purchase is unsatisfactory or faulty, or if the seller refuses to compensate them.

The OFT appealed after the High Court decided in 2004 that Section 75 did not apply to foreign purchases.

The rule applies to anything bought between the value of £100 and £30,000.

'All covered'

Lord Justice Waller, Lady Justice Smith and Lord Justice Moore-Bick overturned the ruling given by Mrs Justice Gloster in November 2004.

In his judgement on the case, Lord Justice Waller said the 1974 Consumer Credit Act applied to "all transactions entered into using credit cards... whether they are entered into in the UK or elsewhere".

Some lenders have compensated customers but others have not, saying it was too expensive to underwrite purchases in this way.

Lloyds TSB, Tesco Personal Finance - part of the Royal Bank of Scotland group - and American Express had been seeking an exemption from their liability for goods bought abroad.

Consumer group Which? welcomed the ruling saying it was "great news" that shoppers would now be officially covered wherever they use their card.