Select to compare credit cards by:
29/06/11

Hidden card charges for travel under scrutiny

The Office of Fair Trading (OFT) has warned travel companies to stop what it calls misleading debit and credit card surcharges, or face legal action.

The regulator also called for the government to legislate to prevent charges for debit cards.

Simon Gompertz reports.

Airlines and train booking firms are the Office of Fair Trading's main target and surcharges which can be several pounds a time just to make a booking with a credit or debit card. Consumers are paying 300 million a year in airline surcharges alone.

Most high street shops don't charge extra, but you have to watch out over the phone or online when you can't use cash. The actual cost of processing a debit card payment is around 20 pence, for a credit card 2% of the price. Yet when you come to buy a train ticket from an agency for instance, you might be charged 3.50 on top of the price, 6.00 per flight with a well known low cost airline and with another carrier, 8.00 for the whole transaction.

The Office of Fair Trading says it will stop misleading surcharges, especially when a free alternative is offered which only a small proportion of buyers can use or if there is no warning in the adverts. It adds that charges must be viewable with one click on a computer and it wants the Government to ban charges on debit cards completely, which it says are like using cash.

Cavendish Elithorn, Office of Fair Trading: "We're glad that a number of companies have agreed to increase the transparency of their surcharging, but where they don't go far enough, we will take enforcement action to make sure that consumers can make the right choice."

Richard Lloyd, Executive Director, Which?: "What we want to see is the Government now moving to bring in new regulations to stop these unfair charges as well as quick, proactive action by businesses that have been involved in this."

One airline criticised in the complaint from Which? which sparked off the investigation was Ryanair. In a statement, it said it would be unaffected by the clampdown because its administration fee could be avoided by passengers who use a particular card. But there could be more restrictions in store for card surcharges; a European directive is being drawn up to prevent companies levying any more than the true cost of processing a payment.