Consumer victory as OFT uphold Which? super complaint Companies must be upfront about card surcharges
28 June 2011
The Office of Fair Trading (OFT) has announced that it is upholding the super complaint submitted by Which? on unfair credit and debit card surcharges.
The super complaint, submitted in March 2011, called for the OFT to investigate excessive surcharges for paying by credit or debit card.
Today the OFT has responded to confirm they're introducing enforcement measures, under the Consumer Protection Regulations, to take action against companies who are not transparent about their surcharges for paying by card.
Debit card surcharge to be included in headline price
This means that customers will no longer be surprised by card fees at the end of their transaction, which our investigation showed could be as much as £40 for a family of four booking a return flight. The OFT has also said that debit card costs should be included in the headline price.
Peter Vicary-Smith, chief executive of Which? said: 'thousands of people have told Which? that hidden or excessive card fees are unfair, and it's a victory for consumers that the OFT supports this view.'
Cavendish Elithorn, senior director of the OFT's Goods and Consumer Group, explained that 'people are frustrated about being asked to pay for paying.' He added '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.'
They have also suggested HM Treasury amend the Payment Services Regulations, to force companies to be upfront and honest about their pricing, or face legal action.
Europe bans unfair card charges
There is also a longer term solution to the problem on the horizon. The Consumer Rights Directive (CRD) includes a proposed ban on excessive card surcharges, which means that companies will no longer be able to charge as much as £5 to process a debit card transaction.
This change comes after more than 2,400 people joined Which? in emailing Ed Davey, consumer affairs minister, to make sure that he convinced his European counterparts to keep the ban in the directive.
Make fast changes
Although the CRD could take up to two years to come into effect, the OFT's demand that companies be upfront about charges could begin straight away. Which? is urging companies to make the changes as soon as possible, rather than waiting for the OFT to start enforcing the ruling.
Peter Vicary-Smith said: 'we want to see the measures recommended by the OFT put in place as quickly as possible and finally put an end to the practice of card surcharging. While we understand that some of the regulatory changes will take some time, we urge the OFT to take steps immediately to ensure that consumers know the true cost of their purchase up-front.'
'Businesses can start to be upfront and fair over card charges today – there's no point waiting until the OFT forces action. Industry shouldn't drag its feet over this.'
Consumers pledge their support
Over the course of the campaign over 43,000 people pledged their support, with many joining in on Which? Conversation with examples of other industries which charge over the odds for card transactions.
Over 2,400 supporters wrote to Ed Davey to encourage him to support the ban on unfair card charging, and people came out on facebook and twitter too to tell us about their experiences and pledge their support for fair, transparent card fees.