Millions of UK credit card holders could receive greater protection when buying goods abroad if a judge rules in the public's favour later this month. The test case coincides with the great summer holiday getaway, but we may well have to wait until later this year for a decision.
The Office of Fair Trading and two credit card providers - Lloyds TSB and Tesco Personal Finance - are heading for a legal showdown over a row concerning people's rights when they use plastic to buy goods and services while overseas.
It will come to a head at a test case hearing at the high court kicking off on July 22, when a judge will be asked to settle the row once and for all.
Many people will be aware that under section 75 of the Consumer Credit Act, your credit card company is jointly liable with the supplier if there is a problem with goods or services and must reimburse cardholders if they make a claim, provided the price of the item is between £100 and £30,000.
It doesn't matter how you buy the goods, whether in a shop, by mail order, by phone or over the net, but the law doesn't apply to debit or charge cards.
However, some credit card companies have avoided paying out on claims made if the goods (which could be anything from a digital camera to a timeshare) were bought overseas, arguing that the provisions of the act only apply to the UK.
That means buyers have been faced with trying to chase the matter up with the shop or company concerned - not easy if the shop you bought the item from is in Berlin or Bangkok and you're back home.
The OFT has been campaigning for years to make credit card companies apply the same safeguards to goods purchased abroad as at home.
The consumer watchdog firmly believes that buying abroad is covered by the rules and that people should be able to make a claim directly against their card company if something goes wrong. Some providers such as Sainsbury's Bank say they will honour valid claims for purchases made abroad, but others won't. The situation isn't helped by the fact that on this particular point, the act is ambiguous.
"It has always been our view that buying abroad is covered," says the OFT.
At the court hearing it will be asking for a "declaration" - a ruling on a point of law which is the subject of disputed interpretation - that section 75 does apply to overseas purchases. The case is pencilled in to last for a week, though the judge may reserve his or her decision until a later date.
What happens at the moment is that different card providers take different views. Some have said they will treat purchases made abroad in the same way as those made in the UK, some will do this as a gesture of goodwill, and some will send cardholders off with a flea in their ear.
It is thought that the card companies aren't so worried about people making a claim because of a faulty piece of electrical equipment that they bought while on holiday
What they are uncomfortable about is the whole issue of so-called "connected liability". They are worried that if, say, someone used their credit card to hire a car while they were on holiday and it crashed into someone or something, then the hire car company was found to have gone out of business, would the card company be hit with a massive bill for damage and compensation?
Lloyds TSB and Tesco Personal Finance inevitably look like the villains of the piece in that they are contesting the OFT's consumer-friendly interpretation of the law.
But they would doubtless say they are merely seeking to bring some clarity to the issue. Lloyds TSB says it is "pleased to be taking part in the proceedings which will give the clarification that is required". Tesco Personal Finance would only say: "We are pleased this test case has now come to court but as legal proceedings have now be gun, it would be inappropriate to comment further."
Last year the OFT named HSBC, Bank of Scotland (part of the same group as the Halifax) and Sainsbury's Bank as three providers that have given assurances that they will honour valid claims for purchases made abroad.
But, just to add to the confusion, HSBC this week told Jobs & Money: "That is not our position." A spokeswoman says it doesn't accept unilaterally that the section 75 protection covers purchases made overseas, "but in the interests of good customer relations we would treat each claim on its merits". In other words, you might be all right but you might not.
Sainsbury's Bank says that while the law needs to be clarified, it has taken the decision to honour any claim relating to a purchase overseas that would have been valid under section 75 were it to have occurred in the UK.
"While the law on this point is unclear, this is a policy decision by Sainsbury's Bank in the interests of customer service and not an acceptance of legal liability to pay such claims," says a spokesman.
Barclaycard, Britain's biggest card provider, takes a similar view. It says it covers cardholders for purchases made abroad, though the amount it will reimburse is the amount put on the card - that is, if you use your card to pay £100 deposit on something costing far more than this, Barclaycard will refund you £100, not the full cost of the item.
