Concurrent Liability on the Credit Card Company

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The significance of these provisions lies in the increased scope of liability imputed on the creditor. The Courts have recently also extended the scope of protection offered under the Connected Lender Liability provision of Section 75 to credit transactions occurring outside the U.K., making foreign creditors also liable for representations made by the supplier of the goods or services. But where the Deemed Agency provisions under Section 56 are concerned, a recent decision that has been rendered by the Courts has revealed the existence of loopholes in the law which creditors may be able to avail of in future, to escape liability that may arise.
The Consumer Credit Act of 1974 repealed and replaced most of the Hire Purchase Act of 1964 and was formulated specifically to provide greater protection to those buying on credit1. For purposes of the Credit Act of 1974, the cardholder is a debtor and has borrowed funds from the credit card company, who is the creditor, in order to purchase goods or services. Section 75 of the Credit Act allows the credit card holders, in some circumstances where there has been a breach of contract or misrepresentation by an English supplier, a cause of action against the Credit Card Company or financier as well. Specifically, this provision of the Act states that: “If the debtor has…….in retaliation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor.” As a result of this provision, credit card companies or financing entities will be jointly liable with sellers who make false representations or breach contracts.
The question of whether the protection offered to consumers under this connected lender liability provision can also be extended to foreign creditors was addressed in the recent case of The Office of Fair Trading v Lloyds TSB plc, Tesco Personal Finance Limited, and American Express Services Europe Limited.