OFT swoops on surcharging firms

The Office of Fair Trading (OFT) has called for a ban on debit card surcharges, and promises to take enforcement action against those firms who continue to mislead consumers.

Surcharges can be misleading to consumers especially when the additional charges come as a surprise, bumping up the price of the product or service, in some cases, quite considerably.

The regulator has found that travel companies are most commonly using these practices, adding additional costs to consumers’ online payments. Passenger travel companies have been put on notice to change misleading debit and credit card surcharging practices or face enforcement action, under consumer protection laws.

A ninety day investigation conducted by the OFT into this issue, focusing on the passenger transport sector, they found considerable evidence of companies using ‘drip pricing’ practices for surcharges online. This is where the firms add additional charges to the total price at various stages during the payment process.

Often, only after consumers have filled in their details through a number of pages during their purchase, do they realise that the total price has increased.

The OFT revealed that this ‘drip pricing’ technique is particularly prevalent in the airline sector where they estimate UK consumers spent £300 million on payment surcharges in 2009 alone.

Following a super-complaint from Which? the OFT has called for the law to be changed to stop consumers being surcharged when buying goods and services with any debit card.

Cavendish Elithorn, Senior Director of the OFT’s Goods and Consumer Group, 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.

“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.”

Categories; Current UK Economy, Advice on Travel Costs, Housing Debt and Bills,