The United Kingdom’s Office of Fair Trading wants the region’s passenger-travel companies to alter what it deems misleading debit and credit card surcharging practices.
The agency on June 28 published its findings from a 90-day investigation into the fees at the request of consumer-advocacy group Which? (
The investigation found substantial evidence of companies using what the agency called “drip pricing”–adding surcharges to the total price only after consumers had landed on a website’s checkout page. That practice happens often within the airline sector, where the agency estimates consumers spent some £300 million (US$480.5 million or 334.4 million euros) in surcharge fees in 2009, the report said.
“Consumers find it harder to shop around and find the best deal if they have to invest time and effort in discovering surcharges,” Cavendish Elithorn, senior director of the office’s goods and consumer group, said in a statement. “This also weakens competition between retailers, which is bad news for the UK economy.”
The agency wants retailers to stop surcharging for purchases made with debit cards, which it deems as the “online equivalent to cash.” Credit card surcharging is acceptable because those payments are more expensive to process. Companies, however, must meet minimum pricing disclosures the agency set in the report, such as posting surcharge information at the beginning of the shopping process.
The office revealed in the investigation that it is discussing surcharging practices with a number of travel companies to secure compliance with the Consumer Protection from Unfair Trading Regulations, which the UK government passed in 2008. The regulations protect consumers from misleading actions and omissions and aggressive commercial practices.
“Many [companies] already meet the minimum standards we expect under the law, and we have secured clear commitment from others,” Elithorn said.
The agency, however, will levy fines if companies do not comply.
The investigation’s findings serve as a “warning shot” for the transportation industry, Megan Bramlette, director at Auriemma Consulting Group, told PaymentsSource in an interview. “I don’t expect these surcharges to be abolished altogether, but I expect them to be reduced,” she said.
The British regulatory environment is undergoing change that could make it more difficult for the agency to get its way with the government by eliminating debit surcharges, Bramlette said.
The agency’s best-case scenario might be to persuade the UK government to enforce a limit on debit card surcharges, Bramlette suggested.
While the investigation was ongoing, at least one low-cost airline decided to raise fees (
EasyJet Airline Co. Ltd. has raised its debit card-booking fees three times during the past seven months. Consumers paying for flights using a debit card now pay £8, up 45% from the £5.50 the airline charged in October. Credit card fees, which have not changed, are £12.95 or £8 plus 2.5% of the flight cost, whichever is higher.
EasyJet waives charges for passengers using partner cards such as Visa Inc.’s Electron card and MasterCard Worldwide prepaid cards.
Meanwhile, budget-friendly Monarch Airlines eliminated its debit card fee, which was 3.5% of the sale, on June 1. It now will charge a flat £10 (US$16 or 11 euros) booking fee for credit card purchases.
Monarch welcomed the agency’s findings.
“There is no justification for charging excessive fees on credit and debit cards,” Monarch CEO Clifford Conrad said in a statement. “It’s good to see that in light of this important decision, other airlines will now have to follow our lead.”
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