Card users win foreign protection

Consumers received great news this month when the court of appeal ruled unanimously that section 75 of the Consumer Credit Act, under which a credit card company is jointly liable with the seller if things go wrong, applies to purchases made overseas as well as in Britain.

The ruling is a major victory for the Office of Fair Trading, which brought the case to court and always maintained that the protection offered under section 75 extended to foreign purchases.

The decision also acknowledges the expansion of internet shopping and air travel, which gives UK consumers easy access to global markets.

Section 75 allows consumers who buy goods or services on a credit card to claim against a card provider when the suppliers are in breach of contract or misrepresent what they are selling. In short, it makes the credit card company jointly responsible if the supplier gets it wrong.

Somewhat generously, the protection applies even if only the deposit is paid by credit card, as long as the goods or services cost between £100 and £30,000.

This means that you could pay a £10 deposit by card on a £12,000 car imported from Europe and still receive a full refund from the credit card company if the car is damaged on delivery or seriously defective, for example.

Claims potential
Now that section 75 extends to purchases made overseas, the potential for claims is enormous.

British consumers spent £12.5bn on overseas credit card transactions in 2004 and the amount is rising each year.

What is more, protection applies not just where consumers buy goods while abroad, but also where goods are ordered in the UK from suppliers based overseas.

Importantly, if you buy goods on the internet from companies overseas you can now look to the credit card company if the goods are not delivered or if the supplier goes bust.

You get all your UK shopping rights whether you buy on the internet from a company in Germany, the United States or China.

These rights can be claimed directly from the credit card company, as it is not necessary to reclaim money from the seller first.

Troublesome timeshare purchases made in haste while on holiday would also come within the ruling.

So if you enter into a timeshare contract overseas after being misled by the pushy sales team about the number of weeks you get or the maintenance costs, you could claim against the credit card company for misrepresentation as long the timeshare did not cost more than £30,000.

Trips abroad for cheaper medical treatment or cosmetic surgery - so-called "bucket and scalpel" holidays - are now possible safe in the knowledge that if you pay by credit card and things go wrong you could claim compensation in the UK.

Damage cover
Credit card companies could be responsible for paying out huge sums where victims need not only to recoup costs, but also to pay to have the damage repaired.

Protection is also available for those consumers who prefer to book their holiday accommodation and car hire directly with suppliers abroad.

A raft of laws protects package holiday customers, but if you put your holiday together yourself, you are vulnerable if overseas suppliers let you down.

Now you can claim against the credit card company if the overseas hotel is not up to scratch or if the car hire company at the resort slams you with extra charges.

The possibilities are endless, but watch out for loopholes. Bear in mind that protection applies only to credit cards such as Mastercard and Visa that are issued in the UK and not to debit or charge cards that have to be paid off every month.

Section 75 does not apply, for example, to Switch, American Express, Diner's Club cards or cards you have taken out overseas.

Ensure that the payment is made directly to the supplier and not an agent, because this will not come within the strict wording of section 75.

If you book a hotel or car hire abroad through a British agent, for example, try to insist that the payment is made directly to the supplier.

If you book a holiday through an Association of British Travel Agents (ABTA) agent, you can ask the agent to use a special form to make sure this happens.

Credit card companies can legitimately refuse to pay out if you use another person's card to buy something.

If you are an additional cardholder the credit card company may refuse your claim even if your name appears on the card.

If this happens you need to make the claim jointly with the principal cardholder. To prevent this problem arising, insist that all card holders are principal cardholders when your credit cards are issued.