House of Lords rules in favour of credit refunds

Credit card firms must pay up as law revision protects end users from contract breaches

Online resellers have welcomed the House of Lords’ support for consumers to claim refunds on goods from credit card companies, even when purchased from abroad.

The ruling brings an end to a case that began in 2004, by the Office of Fair Trading (OFT).

The OFT asked the courts to make a final decision on section 75 of the Consumer Credit Act, which allows end users to claim a refund from their credit card issuer and the seller of the goods if they have been misrepresented or there has been a breach of contract.

John Fingleton, chief executive of the OFT, said: “The application of section 75 to overseas credit card purchases has long been uncertain, which is an unsatisfactory situation for UK consumers.

“We are pleased that the House of Lords has resolved the issue and particularly happy that it has been resolved in a way that gives greater protection to consumers.”

Mike Gammie, IT services development manager for online reseller Misco, said: “The decision offers more protection and less risk for end users, so they will be more comfortable with e-commerce, particularly when buying abroad.”

Roger Butterworth, chief executive of online VAR eXpansys, said: “The ruling is a good thing, because at the moment credit card companies just sit in the middle and do very little to help or protect end users or resellers.”

Clive Longbottom, service director at analyst Quocirca, said: “It is a landmark ruling, because it is a good thing for end users and resellers, but a bad thing for the credit card companies.”

He added: “However, although it is now the credit card firms that will carry the can, VARs should still be aware of where they can add value beyond price and ensure there is still a strong and secure trust with their customers and someone at the end of the phone to assist them.”