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Credit Card User Strikes Blow for Consumer Rights

visa card symbol A woman who was duped into ploughing more than £20,000 into fraudulent ‘land banking’ schemes has struck an important blow for consumer protection after the High Court upheld her right to her money back from a credit card company.

The woman had been dishonestly persuaded to pay for two plots of land which were said to have development potential but which were in fact almost worthless. The companies from which she bought the land were not worth suing so she sought recompense from the company whose credit card she had used to pay.

Her lawyers argued that, by virtue of Sections 56 and 75 of the Consumer Credit Act 1974 (CCA), the company was liable to reimburse her on the basis that the fraudsters were deemed to have acted as the company’s agents. That was despite the fact that the company had no inkling that the transactions had been infected by fraud.

The company argued that the woman had left it too late to sue. She had not issued proceedings until eight years after the relevant transactions and the company pointed to the terms of the Limitation Act 1980, which provides that actions in tort or contract must be launched within six years of a cause of action arising.

In dismissing the company’s limitation defence and entering judgment for the woman in the sum claimed, the Court noted that the case had raised novel issues on which there was no guiding authority from the Court of Appeal or the Supreme Court. There were several other similar matters awaiting resolution of the case.

The Court considered transcripts of a Parliamentary debate in finding that the policy of the CCA was to protect consumers by placing joint and several liability upon credit card companies and giving the latter rights of redress against suppliers which they were in a very much better position to enforce than private individuals.

It was not suggested that the woman should have discovered the existence of the fraud any earlier than she did. On that basis, the Court found that, by operation of Section 32 of the CCA, the limitation period did not begin to run until the date on which she had acquired the knowledge that she had been defrauded. That date had fallen only four years prior to the launch of proceedings which had thus been issued within the six-year limitation period.