Liability for personal injury or loss abroad on holiday

Some Credit Card companies have adopted the practice of enjoining their customers to register their intention of using their credit card abroad.

The reason usually given is to ensure that the foreign transaction is not ‘flagged up’ as a potentially fraudulent transaction with the result that access to funds using the card is ‘frozen’ until the identity of the user is verified.

That the credit card companies should express such a degree of concern that their customers should not be stranded abroad without funds is indeed very commendable and one may legitimately ask why such a practice is a fairly recent innovation.

However, be very aware that such concern is motivated more by self-interest than altruism in light of the position following the judgement of the House of Lord in Office of Fair Trading v Lloyds Bank [2007] UKHL 48 the effect of which is that a holidaymaker may pursue a compensation claim against his or her credit card supplier in the UK, if an accident occurs during the course of part of the holiday which was paid for by credit card.

This principle only extends to the holidaymaker who paid for the holiday on their credit card. It will not, for example, therefore be possible for family members to claim against the credit card supplier for injuries and losses resulting from an accident abroad - it is instead only the card holder who may make a claim.

This principle also extends to excursions which are paid for by credit card whilst on holiday, even though the transaction occurs abroad, provided the cost of the excursion exceeds £100.

Section 75 Consumer Credit Act 1974 allows a consumer to pursue a compensation claim against the credit card company for breaches by a supplier in respect of a breach of contract. By way of an example, if an English holidaymaker paid for his accommodation at a hotel, and then suffered injury at that hotel, then the credit card holder is, in principle, able to pursue a claim against the credit card supplier in the English courts. However, it will evidently be very difficult for credit card companies to defend these types of claims because they will usually have no real relationship with the supplier (ie the hotel), and it is therefore unlikely that they will be able to obtain any evidence to rebut the credit cardholder's allegations of negligence against the supplier.

Prior to the case of Office of Fair Trading v Lloyds Bank, it was not clear whether it was possible for a consumer to pursue a claim against a credit card company for a breach by a supplier, for those cases when the relevant transaction occurred abroad. This point was ultimately decided by the House of Lords, which concluded that Section 75 of the Consumer Credit Act 1974 was not limited to domestic supply transactions. The House of Lords recognised that the effect of this ruling would be to 'impose irrecoverable losses on card issuers', but considered that the card issuers were better able to bear those losses than card holders.

Thus, in informing your credit card supplier of your intention to use the card for foreign transactions, be aware of any attempt by the supplier overtly or otherwise to make such foreign transactions contingent upon any ‘waiver’ or ‘indemnity’ in relation to the liability of the card issuer under section 75 CCA!

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