Airlines to Scrap Debit Card Surcharges Following OFT Enforcement Action
Following OFT enforcement action, 12 airlines have agreed to include debit card surcharges in the headline price rather than surprise consumers at the end of the booking process. Any surcharges for paying by credit card will be easy to find when booking online.
Aer Lingus, BMI Baby, Eastern Airways, easyJet, Flybe, German Wings, Jet2, Lufthansa, Ryanair, Thomas Cook, Thomson (TUI) and Wizz Air were subject to an OFT consumer law investigation and have agreed to change their practices.
As part of this investigation, the OFT has been cooperating closely with the AGCM (the Italian Competition and Markets Authority), which has also been challenging a number of airlines on their pricing practices, among other things.
The OFT believes that people should not have to incur surcharges to use a debit card online. Debit cards are the online equivalent of cash which means that headline prices should be the price people can pay.
The Consumer Protection from Unfair Trading Regulations 2008 contain a general prohibition against unfair commercial practices and, specifically, prohibitions against misleading actions, misleading omissions and aggressive commercial practices. The Regulations are enforceable through the civil and criminal courts.
The Air Services Regulation 2008 requires all flight prices to be presented inclusive of all foreseeable and unavoidable charges and fees.
The OFT believes that traders may still impose surcharges for credit cards, which can be more costly to process. However, it is critical that these charges are transparent and not sprung on shoppers towards the end of the booking process. As part of the OFT’s enforcement action the airlines agreed to make surcharges for credit cards more transparent so that these charges will be clearer and easier to find during the booking process.
Following recommendations from the OFT last year, the Government has also announced plans to bring forward legislation to ban excessive debit and credit card surcharges across the economy. The OFT estimated that debit and credit card surcharging in the airlines sector cost consumers £300 million a year.
Eastern Airways, easyJet, Flybe, German Wings, Lufthansa, Thomas Cook, Thomson (TUI) and Wizz Air have already made changes to their pricing structures, websites and marketing materials agreed during the course of the OFT investigation. Other airlines will change their advertising practices by 1 August and fully complete further changes over the coming months.
Clive Maxwell, the OFT’s Chief Executive, said: “This is a great outcome for the millions of people who buy flights online. It is important that the cost presented when they search for a flight is realistic and that they are not surprised by extra charges. Otherwise it is harder for them to shop around for the best deal.
“Because of our enforcement action, most airlines have already made their headline prices and other payment charges easier to understand by changing their systems and processes. The rest will complete changes in the coming months. We made it clear from the start that we would use all of our enforcement powers, including court action if necessary, but are pleased to have reached agreement with the airlines before court proceedings were required.”
In June last year, the OFT responded to a super-complaint from Which? and warned the airline industry to change practices or risk enforcement action.