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New credit card court challenge

Lloyds TSB, Tesco Personal Finance and American Express went to the House of Lords last week to try to overturn a major piece of legislation designed to protect consumers.

The credit card providers are arguing that section 75 of the Consumer Credit Act does not apply to purchases made abroad. Put simply, this rule states that if there is a problem with an item or service bought on a credit card, the card issuer can be held liable, along with the supplier of the goods or services, where the purchase is worth more than £100 but less than £30,000.

The card firms, though, say they are being placed in the position of insurers for possibly millions of foreign suppliers. "This legislation was drafted in 1974 when few card purchases were made abroad," a Lloyds TSB spokeswoman said. "Now there are millions each year."

Since 2003 there have been several attempts to clarify the law on overseas card purchases, with the Court of Appeal last year ruling against the providers.

The judgment in the present House of Lords hearing, which was brought jointly by the lenders and the Office of Fair Trading, is expected later this year.