Protection law rattles card firms

A YEAR AGO, as they watched workmen hurriedly resurfacing the driveway of their Surrey home, Michael and Jean Ketley wondered if they'd employed the right firm. When the drive began to crack up earlier this year, their fears were justified.

The company, which had charged them pounds 2,200 for the work, could not be traced. 'When I tried to chase them, the premises were being used by a motor-cycle repairers,' Mrs Ketley said.

Fortunately, the Ketleys had paid for the work with their Barclaycard. In May Mrs Ketley contacted Barclays, asking for reimbursement and compensation. After a lengthy exchange of letters and a lot of persistence from the Ketleys, Barclays agreed to settle. They are to repay the original pounds 2,200 and a further pounds 500 towards the Ketleys' additional costs.

Mr and Mrs Ketley benefited from section 75 of the Consumer Credit Act - legislation described by Sonia Purser, a lawyer at the Consumers' Association, as 'one of the best pieces of consumer protection that there is'. However, credit industry representatives were at a public meeting in Edinburgh last month arranged by the Office of Fair Trading to discuss possible amendments to section 75. The OFT has been asked by the Government to review the Consumer Credit Act.

Section 75 applies to purchases on credit of more than pounds 100, with a current maximum set at credit advances of pounds 15,000. 'At the moment, credit card companies are jointly and severally liable with traders. This means that you can choose to claim against the trader or the credit card company,' Ms Purser said. The liability extends to cover additional costs you may incur on top of the original purchase price - so that you could have a legitimate claim, for example, for the cost of repairing damage caused by a faulty piece of equipment.

Not surprisingly, credit card companies are anxious to reduce their legal position to a 'second in line' liability. This would mean that consumers would first have to try to settle a claim with the supplier. Ms Purser says the Consumers' Association would regard this as an erosion of consumer protection. 'We find at the moment that credit card companies will put pressure on traders to pay up, and that's very useful. If they weren't jointly liable, consumers might have to sue traders before being able to go for the credit company,' she said.

Sir Bryan Carsberg, Director-General of Fair Trading, is currently weighing up the arguments for and against a move to 'second in line' liability.

However, the issue is already complicated by legal arguments about the current wording of the Act. In a long-running dispute, the credit card companies have attempted to claim that section 75 does not apply to purchases made abroad. They have also attempted to take advantage of the legal distinction between the credit card issuer and the merchant acquirer (the company that has arranged with a particular supplier to accept credit card payments).

In both cases Sir Bryan Carsberg has come out in favour of the view that section 75 protection to consumers fully applies. In the absence of case law, however, some credit card companies continue to raise objections. Ms Purser advises consumers with complaints to persevere. 'If people persist, credit card companies quite often will cave in. If they won't, and particularly if the amount of money is under the small claims arbitration limit of pounds 1,000, it's worth having a go through the county court.'

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