UK Court Deals Blow to Credit Card Issuers in Appeal

By CollectionIndustry.com Staff

London’s calling, and the news may not be great for credit card issuers.

Backing an earlier appeal by Britain’s Office of Fair Trading (OFT), London’s Court of Appeal ruled Wednseday that credit card guarantees cover both purchases abroad as well as in the UK.

The High Court had previously ruled in the credit card companies’ favor, saying that credit card companies weren’t necessarily responsible for honoring goods-and-services guarantees when a credit card is used to pay; this ruling, however, overturns the prior ruling.

While the OFT sees the ruling as “good news for consumers” ? both abroad and in the U.S. ? credit card companies see the ruling as potentially ruinous. In a statement addressing the ruling, UK bank Lloyds TSB said, “The ruling means that a credit card customer can, for example, make a purchase abroad for 30,000 pounds, put just one pound of the purchase price on their credit card and then claim against the credit card company for millions of pounds in consequential losses.”

Lloyds also said that they will consider appealing the decision.