Ban on hidden card charges from 2012
Airlines and others will no longer be able to tack on debit and credit card charges at the end of transactions, in what Which? described as a “huge victory for consumers”.
The Government has announced it will ban firms from adding “hidden” credit and debit card surcharges on to purchases in the final stages of a transaction.
Treasury Minister Mark Hoban said consumers should be able to see “up front” how much they will have to pay, rather than facing last-minute extras added to the cost of flights, concert tickets and other goods.
The plan follows an Office of Fair Trading (OFT) investigation earlier this year which found that UK consumers spent around £300 million on payment surcharges in the airline sector alone.
Some 78 per cent of people buying flights only became aware there were going to be price rises – including other additional charges such as baggage fees – while they were paying for their tickets.
On average consumers buying air, ferry and rail tickets have to go through four to six web pages before the surcharge is added to the total price.
The Government is to launch a consultation in the new year, with a ban covering all forms of payment and covering most retail sectors to come into affect by the end of 2012.
The Government’s decision to ban rip-off debit and credit card surcharges is a huge victory for consumers. Richard Lloyd
Businesses will still be able to add a small charge to cover the cost of a payment method, but fees must not be excessive and must be flagged up earlier.
Mr Hoban said: “We want consumers to be able to shop around. They have a right to understand the charges they may incur up front and not be hit through a hidden last-minute payment surcharge.”
Airlines named in OFT report
OFT refused to name and shame the worst offenders but pointed out that easyJet charged £8 per debit or credit card transaction, while Ryanair added £6 per journey and Trainline charged £3.50 for a credit card transaction.
A further two airlines – Lufthansa and Swiss – subsequently announced plans to charge credit card users £4.50 despite the OFT’s report into the practice.
A European Union directive will ban businesses in many sectors, including airlines, from imposing above-cost surcharges on any form of payment from mid-2014 but the Government intends to act faster than that timetable.
Mr Hoban said: “We’re leading the way in Europe by stopping this practice. The Government remains committed to helping consumers get a good deal in these difficult times.”
Consumer champion Which? submitted a “super-complaint”, backed by thousands of supporters, to the OFT earlier this year and has claimed debit card surcharges were adding £265,000 a day to the cost of flights.
Which? executive director Richard Lloyd, said: “The Government’s decision to ban rip-off debit and credit card surcharges is a huge victory for consumers.
“This announcement goes further than the OFT’s proposals, finally putting an end to these unfair and excessive charges.”