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Credit card companies could face compensation claims worth millions of pounds after losing a landmark case at the Court of Appeal.
The court overturned a previous ruling that lenders were not liable for losses suffered by consumers using their cards abroad.
The case centred on section 75 of the Consumer Credit Act, which requires credit card lenders to compensate borrowers who suffer losses of over £100 after buying goods or services on their card if they are unable to claim redress from the seller.
While all lenders pay out on claims relating to transactions in the UK, some insisted that the law does not apply to overseas card transactions.
Hugh Evans, a financial litigation partner at solicitors DLA Piper, commented: "This decision places an intolerable burden on card issuers, effectively positioning them as insurers for millions of foreign supplies in situations where they would not know the supplier, would have no direct knowledge of the facts and would not be in a position to assess the merits of any claims"
Three lenders, Lloyds TSB, American Express and Tesco Personal Finance, had asked the court to rule that Section 75 did not cover customers while they are outside of the UK.
Before the ruling, lenders such as HSBC, HBOS, MBNA and Sainsbury's Bank had all agreed to meet claims on overseas transactions as a gesture of goodwill. All three are now considering whether to apply to the House of Lords for leave to appeal.
Mike Naylor of Which?, stated: "This landmark decision confirms what Which? has
always believed - that credit card holders should have the same protection when
they use their card overseas as they do in the UK. It is great news for
consumers that they are now officially covered wherever the card is used."
Source:
Getting Paid
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