Government decision to ban ‘rip-off’ debit and credit card surcharges is a huge victory for consumers, says Which?
23 December 2011
As the Government announces its decision to ban excessive debit and credit card surcharges*, Which? executive director, Richard Lloyd, says:
“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 Office of Fair Trading’s proposals, finally putting an end to these unfair and excessive charges. Over 50,000 people supported Which?’s campaign to see these fees stamped out.
“Given that airline passengers alone pay more than £265,000 a day** in card surcharges, businesses shouldn’t drag their feet over this. While the law will come into force at the end of 2012, we want companies to be upfront and fair over card charges today.”
Notes to Editor
* Which? submitted a super-complaint to the Office of Fair Trading (OFT) in March 2011, asking the regulator to investigate excessive credit and debit card surcharges. Which? wanted its super-complaint to result in:
> Companies to tell consumers upfront if they have surcharges and how much they are – this needs to be in plain language in their advertising and promotions;
> Fair charges – the costs to the consumer should be the same as the cost to the retailer – this shouldn’t be a hidden way of making money;
> For debit cards, as the cost to the company is so small, Which? thinks it’s more reasonable for the retailer to absorb the cost and not pass it on to their customers.
On 28th June, the OFT proposed that charges should be banned.
The Treasury has decided to ban excessive card charges. Businesses will no longer be able to charge excessive fees for paying by debit card and must limit credit card charges to the borne costs incurred by the retailer (i.e so it will only cost the consumer what it costs the business to process the payment) through the Consumer Rights Directive (CRD). This will come into force by the end of 2012. Government is launching a consultation on this at the beginning of 2012. Which? will be engaging thoroughly in this consultation.
**Calculation based on passenger uplift figures (Civil Aviation Authority 2009) and debit card fees for the 28 UK based airlines (9 of which charge for using debit and/or electron cards). 39% of total card transactions are estimated to be on debit cards (UK Cards Association).
Which?, as a registered consumer charity, has legal powers under the Enterprise Act 2002 enabling it to file super-complaints with the Office of Fair Trading (OFT). A super-complaint allows designated consumer bodies to complain to the OFT and specific sectoral regulators about market features that may be significantly harming consumers' interests.
