Government to bring forward legislation to tackle excessive card surcharges
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Issued 23 December 2011 - Hm Treasury
The Government is today announcing that it will take action
to tackle excessive card surcharges that are opaque, misleading and
prevent consumers getting a good deal. Following the Office of Fair
Trading’s recommendations, the Government will:
- Ban excessive surcharges on all forms of payment, not
just debit cards;
- Extend the ban across most retail sectors, not just
transport; and
- Become the first European country to act by implementing
forthcoming European legislation early to ban this practice before the
end of 2012.
Businesses will not be able to load on excessive payment
surcharges. But they will be able to add a small charge to cover their
actual costs for using any particular form of payment
The Financial Secretary to the Treasury, Mark Hoban, said:
"We want consumers to be able to shop around. They have a
right to understand the charges they may incur up front and not be hit
through a hidden last minute payment surcharge. We’re leading
the way in Europe by stopping this practice. The Government remains
committed to helping consumers get a good deal in these difficult
times.”
The Consumer Minister, Edward Davey, said:
"We want to make sure that consumers paying by card do not
have to pay the excessively high surcharges being imposed on them by
some airlines and other businesses. That is why we will consult on
early implementation of the Consumer Rights Directive provision to
protect consumers from excessively high credit and debit card charges."
To take this forward, the Government will publish a
consultation in the New Year setting out next steps.
Notes
- On 30 March 2011, Which? submitted a super-complaint to the
OFT about payment card surcharges in the passenger transport sector.
- The OFT published its response to the super-complaint on 28
June 2011. It found considerable evidence of companies using
'drip pricing' practices for surcharges online - adding payment charges
to the total price only after consumers have filled in a number of web
pages during their purchase. The practice is spreading.
- The OFT concluded that surcharging for using a credit or
debit card is potentially misleading to consumers when it comes as a
surprise and called for the Government to ban surcharges on debit
cards. The Government is today announcing that it will ban
excessive surcharges across all forms of payment methods.
- The EU Consumer Rights Directive will ban businesses in
many sectors, including the airline sector, from imposing above-cost
surcharges on any form of payment from mid-2014 (e.g. surcharges that
exceed the costs the business incurs on a card payment). The
Government is today announcing that it intends to consult on
implementing this provision of the Directive early with the goal of
banning above-cost surcharges by the end of 2012.
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