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28/06/2011
OFT To Take Action Over Passenger Surcharges
The OFT has put passenger travel companies on notice to change misleading debit and credit card surcharging practices or face enforcement action under consumer protection laws.
Publishing its findings on these surcharges, following a super-complaint from Which?, the OFT also calls for the law to be updated to stop consumers being surcharged when buying goods and services with any debit card.
A 90 day OFT investigation into the issue, which focused on the passenger transport sector, found considerable evidence of companies using 'drip pricing' practices for surcharges online - adding payment charges to the total price only after consumers have filled in a number of web pages during their purchase. This practice is particularly prevalent in the airline sector - where the OFT estimates UK consumers spent £300 million on payment surcharges during 2009.
The OFT considers that surcharging for using a credit or debit card is potentially misleading to consumers when it comes as a surprise - particularly when free payment mechanisms are only available to a small proportion of consumers, making a surcharge effectively compulsory.
To make headline prices truly meaningful and comparable, the OFT is calling for traders to stop charging for paying with any debit card - the online equivalent to cash. Traders should still be able to impose surcharges for other payment mechanisms such as credit cards, which can be more costly to process, provided that they meet the minimum transparency requirements set out by the OFT in today's report.
The OFT is currently discussing surcharging practices with a number of passenger travel companies to secure compliance with Consumer Protection Regulations and will take enforcement action as necessary.
(BMcN/GK)
Publishing its findings on these surcharges, following a super-complaint from Which?, the OFT also calls for the law to be updated to stop consumers being surcharged when buying goods and services with any debit card.
A 90 day OFT investigation into the issue, which focused on the passenger transport sector, found considerable evidence of companies using 'drip pricing' practices for surcharges online - adding payment charges to the total price only after consumers have filled in a number of web pages during their purchase. This practice is particularly prevalent in the airline sector - where the OFT estimates UK consumers spent £300 million on payment surcharges during 2009.
The OFT considers that surcharging for using a credit or debit card is potentially misleading to consumers when it comes as a surprise - particularly when free payment mechanisms are only available to a small proportion of consumers, making a surcharge effectively compulsory.
To make headline prices truly meaningful and comparable, the OFT is calling for traders to stop charging for paying with any debit card - the online equivalent to cash. Traders should still be able to impose surcharges for other payment mechanisms such as credit cards, which can be more costly to process, provided that they meet the minimum transparency requirements set out by the OFT in today's report.
The OFT is currently discussing surcharging practices with a number of passenger travel companies to secure compliance with Consumer Protection Regulations and will take enforcement action as necessary.
(BMcN/GK)
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