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Excessive card charges to be banned

Excessive card charges to be banned

Category: Credit cards

Updated: 23/12/2011
First Published: 23/12/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The practice of loading expensive charges onto card purchases such as air travel or online bookings is to be outlawed by the end of next year.

The Government said that it is committed to tackling card charges that are 'opaque, misleading and prevent customers from getting a good deal'.

A report was published by the Office of Fair Trading in the summer which called for charges made by airlines and other travel operators to be probed.

Airline customers are often charged hefty booking fees after completing a number of pages on the internet – known as 'drip pricing'.

Figures from the OFT showed that people in the UK spent around £300 million last year on surcharges made by airline operators.

But the Government has said it will go further, banning the practice from most retail sectors.

As well as air travel companies, businesses such as cinemas, rail operators and local authorities have been found using drip pricing.

Under the new rules, businesses will only be allowed to add a small charge to cover their actual costs.

Consumer group Which? described the ruling as a huge victory for consumers.

"Given that airline passengers alone pay more than £265,000 a day in card surcharges, businesses shouldn't drag their feet over this," said Richard Lloyd, executive director of Which?

"While the law will come into force at the end of 2012, we want companies to be upfront and fair over card charges today."

The rules are set to be introduced across Europe from mid-2014 but Mark Hoban, Financial Secretary to the Treasury, said that the Government is leading the way in Europe by stamping out the practice.

"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," he added.

"The Government remains committed to helping consumers get a good deal in these difficult times."

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