Published on Wednesday, June 29, 2011
Travel companies are being threatened with enforcement action by the Office of Fair Trading for misleading customers over debit and credit card fees.
The OFT has ordered airlines and other travel companies to be upfront, instead of making customers click through pages and pages online before "surprising" them with the surcharges.
The move follows a 'super-complaint' by Which?, the consumer rights publication.
A 90-day OFT investigation found "considerable evidence" of companies using "drip pricing" practices for surcharges online.
"This practice is particularly prevalent in the airline sector - where the OFT estimates UK consumers spent Â£300 million on payment surcharges during 2009," said the OFT.
The OFT considers that surcharges are potentially misleading to consumers when they come as a "surprise".
"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," it said.
The OFT is asking the Government to change the law to prohibit surcharging for all debit cards.
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."
Bob Atkinson, travel expert for www.travelsupermarket.com, said it welcomed the OFT's decision.
â€œWhilst there are some charges associated with taking payments by debit card to travel providers, there is no excuse for the high costs consumers currently face.
"Travel companies have clearly been seizing an opportunity to cash in and we will hopefully see an end to this practice, something recently embraced by Monarch Airlines with its dropping of debit card charges. We now call on the travel industry as a whole to respond in a timely manner to these findings.
â€œWe are also pleased that the OFT found that credit card charges should be more transparent to customers, enabling them to make informed decisions when buying their travel.
"However, charges imposed need to be reasonable and on a percentage basis as opposed to a per person charge. We have not yet seen anything around this issue in the information supplied so far by the OFT and the lack of clarity on the credit card issue is very disappointing."
He added that the Government should now take action to stop these unfair practices once and for all through legislation.
Monarch CEO Conrad Clifford said other airlines will now have to follow its lead.
"Let us hope they do so without any handwringing or prevarication," he added.
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By Bev Fearis
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The recent insolvency of Low Cost Travel Group, one of the large players in the travel industry had a big impact on the travelers, hotels and all related players from both wholesale & retail arms. There were about 27,000 people on a holiday who had booked through the company comprised of a €200 million wholesale arm and €500 million OTA / retail arm.