Plastic protection for shoddy souvenirs

If you are in the habit of nipping over to Hong Kong for a camera or a music centre then the proposed changes to credit card law announced this week will have you dancing in the street.

If, on the other hand, you belong to the multitude that rarely spends more than pounds 100 a purchase on plastic then there is precious little to jump up and down about.

The Office of Fair Trading report, Connected Lender Liability, recommends changes to the 1974 Consumer Credit Act. In it, Sir Bryan Carsberg, director- general of fair trading, proposes to limit the liability of the credit card companies in respect of faulty goods to the amount of credit granted on the purchase.

As the law stands, credit card lenders are as liable for faulty goods bought using their cards as the shop that sold them. Moreover, their liability is unlimited. So if you use your credit card to buy (or put a deposit on) goods or services worth over pounds 100 then the lender will be liable for the full cost of the goods plus any connected losses.

For example, if you buy a pounds 101 television which subsequently develops an electrical fault and burns down your house then the credit card company is liable for the cost of the house and contents, including the television. If, however, it was a pounds 99.99 ghetto blaster that did the damage then the card company is off the hook.

But the one grey area has been the purchase of items abroad. The credit industry has strongly challenged the provisions of the 1974 Act, claiming that its responsibilities do not extend to goods purchased overseas. Sir Bryan disagreed and a deal has been struck with the credit card industry which changes all that.

In return for a cap on their liabilities, most card companies have agreed to meet claims on overseas transactions on an ex gratia basis for the amount of credit given until December1996. After that the position will be reviewed, if not superseded, by legislation. Even though there is no time scale for the necessary legislation, the promise on overseas transactions takes immediate effect.

The quid pro quo is the cap on the card companies' liability, both here and overseas. Instead of being liable for unlimited damages in relation to goods costing between pounds 100 and pounds 30,000, they will only be liable for the amount of credit granted on any transaction. Consumers who pay a deposit by card and the balance in cash will lose their right to claim the full amount from the card issuer.

The consumer's lot is further eroded because the OFT proposes that the monetary limits of pounds 100 and a reduced ceiling of pounds 25,000 should refer to the amount of credit granted rather than the purchase price of the item. So unless you actually borrow more than pounds 100, the card companies are in the clear.

Sir Bryan described the concessions from the industry as "a very significant improvement for consumers". In the short term it certainly is. Until the legislation is enacted, credit card users will still enjoy unlimited protection on goods costing more than pounds 100 and, if the goods are bought abroad, protection on the amount of credit granted.

But when the Government gets around to amending section 75 of the 1974 Consumer Credit Act, a good deal of the domestic protection will disappear.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
tvPoldark, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
News
Lois Pryce... Life Without a Postcode. Lois lives on a boat with her husband.. Registering to vote in the election has prooved to be very difficult without a fixed residential post code. (David Sandison)
newsHow living on a houseboat meant I didn't officially 'exist'
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing