OFT attack on travel’s payment card surchage practices

A clampdown on airlines and online travel companies operating in the UK charging ‘misleading’ surcharges for online payments by debit card is being imposed by the Office of Fair Trading.

The OFT has called on travel companies to change card surcharging practices or face enforcement action under consumer protection laws.

The Government is also being urged to change the law to outlaw surcharging when buying goods and services with all debit cards. The action follows a supercomplaint from consumer watchdog Which?

A 90-day OFT probe 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.

The OFT estimates UK consumers spent £300 million in online payment surcharges to airlines alone in 2009.

The OFT said it considers surcharging for using a credit or debit card “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.

However, 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 minimum transparency requirements, according to the OFT.

Goods and consumer group senior director Cavendish Elithorn said: “The growth of internet retailing has brought massive benefits, but the increasing use of card surcharges is not one of them. You can’t buy online with cash and people are frustrated about being asked to pay for paying.

“Consumers find it harder to shop around and find the best deal if they have to invest time and effort in discovering surcharges. This also weakens competition between retailers which is bad news for the UK economy.

“We recognise that most traders want to treat their customers fairly. Many already meet the minimum standards we expect under the law and we have secured a clear commitment to change from others.

“However, we will take enforcement action against any businesses that do not respond to today’s announcement and instead continue to use misleading surcharging practices.”

He added: “We believe there is also a strong case for a change in the law so that the cost of using a debit card, the almost universal payment method for today’s online consumers, is always included within the headline price.”

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