The consumer body Which? has submitted a super-complaint to the Office of Fair Trading ('OFT') asking it to investigate the surcharges that are payable when customers pay for goods or services by debit/credit card. A super-complaint is a complaint made under a fast-track procedure to the OFT by certain bodies which represent consumers, as designated under the Enterprise Act 2002. Such a complaint is made when concerns are raised that a feature, or combination of features, of a market is, or appear to be, significantly harming the interests of consumers. Which? is one of eight bodies currently designated to make super-complaints.
Which? wants the OFT to investigate the issue of transparency of surcharges and the level of the charge itself. It warns that these charges are unjustifiable and becoming increasingly widespread. The actual cost to companies for taking payment by card is around 20p for a debit card, and no more than 2% of the transaction for a credit card, however its researches have found dozens of examples of companies charging far higher fees. It claims to have the support of over 40,000 people already, including the UK Cards Association who commented that, "It is not good enough for some businesses to generate profit by imposing inflated surcharges when their actual card processing costs are substantially lower."
In essence Which? wants firms to do three things:
- To say up front if they levy surcharges and how much they are, and that this needs to be in plain language in advertising;
- The charges should be fair in that the cost of paying by card should be the same as the cost to the company, rather than a hidden way for firms to make money; and
- As the cost to firms for debit card transactions is so small it would not be unreasonable for them to absorb the cost and not pass it on to their customers.
This will be the first time that the OFT will investigate credit/debit card surcharging, although previously it has identified the practice as a problematic part of 'drip-pricing' where extra charges are added throughout the buying process.
The OFT has 90 days to establish whether any element, or combination of elements, in the relevant markets is, or appears to be, significantly harming the interests of consumers and publish a response indicating what action, if any, it proposes to take. It will shortly invite interested parties to provide any evidence which may be useful in its assessment.
To view Community Week, Issue 515 – 1 April 2011 in full, click here.
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