Hidden card charges to be banned

28 June 2011 Last updated at 14:37 GMT The OFT has warned it will take action if companies do not comply Travel companies have been ordered to end the use of hidden surcharges for passengers paying by card.

Airline, ferry and rail passengers typically have to click through four to six pages of an online booking before the charge is added to the price.

Now the Office of Fair Trading (OFT) has ordered them to make all debit or credit card charges clear immediately.

It also wants the law changed to abolish altogether charges for using debit cards.

The OFT said travellers spent ?300m on card surcharges in the airline industry alone in 2010.

It warned that if travel firms did not comply, it would take action against them, using consumer protection laws.

"We will take enforcement action against any businesses that do not respond to today's announcement and instead continue to use misleading surcharging practices," said Cavendish Elithorn, of the OFT.

Super-complaint

The OFT's announcement comes in response to a super-complaint by the consumers' association Which?.

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A designated consumer group can make a super-complaint to the Office of Fair Trading (OFT) if an issue is "significantly harming the interests of consumers".

The OFT has 90 days to respond by stating what action, if any, it plans to take on the issue and the reasons behind its decision.

Earlier this year it had called for customers to be told upfront about charges.

It had also argued that charges to customers should be the same as the cost to retailers, and that retailers should absorb the cost of debit card payments.

Which? had pinpointed low-cost airlines as the worst offenders, with cinemas, hotels and even some local authorities starting to copy them.

Peter Vicary-Smith, chief executive of Which?, said the OFT's report was a victory for consumers.

"We want to see the measures recommended by the OFT put in place as quickly as possible and finally put an end to the practice of card surcharging," he said.

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There is frustration when people think they are paying for paying, rather than paying for the product”

End Quote Cavendish Elithorn OFT "Businesses can start to be upfront and fair over card charges today - there's no point waiting until the OFT forces action."

Consumer minister Edward Davey said: "We will work with the OFT to make sure that consumers paying by card do not have to pay excessive surcharges."

He added that the government was supporting the introduction of European rules, which would stipulate that surcharges must reflect the costs to businesses. It could be up to two years before these are adopted in UK law.

'Paying for paying'

Airline Easyjet charges a surcharge of ?8 for payments by debit card and ?8 plus 2.5% of the total transaction for credit card users, the OFT's report said.

An Easyjet spokesman said: "We would like to see card charges incorporated into the headline fare, however, for consumers to benefit there needs to be a level playing field.

"The only way to ensure consumers can make easier price comparisons is if a common treatment of card charges can be agreed across the whole of the transport sector in Europe, including train operators and online travel agents."

Ryanair charges a fee of ?6 per journey for both credit and debit card users.

Ryanair responded to the OFT's move by arguing that its administration fees, which include card charges, were optional and "fully avoidable" for customers using a pre-paid card.

But the OFT said that for many people charges such as these were, in effect, compulsory.

Trader Credit card surcharge Debit card surcharge

7% per transaction (min ?4.99)

3.5% per transaction (min ?4.99)

Some travel companies have agreed with the regulator that they will include these charges in their headline price online.

The OFT's Mr Elithorn said he expected this change to be in place within six months.

But he admitted that the surcharge did not have to reflect the cost to companies of processing these payments.

He accepted that this could be annoying for consumers.

"There is frustration when people think they are paying for paying, rather than paying for the product," he said.

Airline Monarch, which has already stopped levying debit card fees, said: "There is no justification for charging excessive fees on credit and debit cards."

Rail booking service Thetrainline.com said: "We will be working with the OFT to make credit card charges clearer within the booking process."

Pricing

At present, using a credit card can offer extra protection for customers if things go wrong, such as a travel company collapsing.

The regulator believes that by banning a surcharge for those using a debit card, competition will force down the cost of credit card surcharges.

In December, the OFT warned retailers about tricking customers with misleading price offers, including "drip pricing" which involves adding compulsory delivery costs.

Businesses must include any compulsory extras in their headline price on their website.

For example, if an airline charges customers a fuel duty surcharge, this must be included in the advertised price of the flight.

Super-complaints have been in the armoury of consumer groups since 2002.

Examples so far have included complaints about bank charges, payment protection insurance, prison call costs and doorstep lending.

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IMF chief remanded on sex charges

16 May 2011 Last updated at 19:44 GMT Mr Strauss-Kahn denies the allegations against him

A court in New York has remanded IMF chief Dominique Strauss-Kahn in custody on charges of sexual assault.

The judge said Mr Strauss-Kahn, 62, is a flight risk. He was arrested on Saturday after boarding a plane, and accused of trying to rape a hotel maid.

Mr Strauss-Kahn, who had been seen as a front-runner in France's presidential election in 2012, denies the charges.

His lawyer expressed disappointment at bail being denied, but said his client would be exonerated.

"This battle has just begun," defence lawyer Benjamin Brafman told the court.

Prosecutors told the court it was not the first time Mr Strauss-Kahn had been involved in such an incident and argued he had been arrested attempting to flee the country.

Defence lawyer Benjamin Brafman contested this, saying the defendant had not tried to flee the scene and was actually rushing for a lunch appointment.

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When I hear your client was at JFK airport about to board a flight, that raises some concerns”

End Quote Judge Melissa Jackson He added that Mr Strauss-Kahn later called the hotel to say he was at the airport and had left a mobile phone in his room.

'Concerns'

However Judge Melissa Jackson denied the defence's offer to post $1m (?617,000) bail and agree to stay with his daughter in New York until the next hearing on Friday.

"When I hear your client was at JFK airport about to board a flight, that raises some concerns," Ms Jackson said.

The charges relate to an alleged assault at the Times Square Sofitel hotel in New York.

According to the New York Police Department, a 32-year-old maid told officers that when she entered his suite on Saturday afternoon, Mr Strauss-Kahn emerged from the bathroom naked, chased her and sexually assaulted her.

The woman was able to break free and alert the authorities, a NYPD spokesman added.

Continue reading the main story Michelle Fleury BBC News, New York

On a rain-soaked Monday morning, the pavements outside the courthouse were blocked by reporters and cameras all waiting to catch a glimpse of this particularly high-profile defendant.

Dominique Strauss-Kahn was brought from a holding cell to the courtroom looking pensive in a black overcoat. Cameramen and photographers jostled to try to capture an image of the IMF head and French presidential hopeful.

But instead it was his New York lawyer who spoke to the waiting media after the judge said Mr Strauss-Kahn must remain in jail. Benjamin Brafman is well-known in legal circles in the US. His past clients have included other famous figures such as Michael Jackson and Sean P Diddy.

When Mr Brafman emerged he told reporters that the battle had only just begun.

Later on Saturday Mr Strauss-Kahn was detained on board an Air France flight at New York's John F Kennedy airport minutes before take-off.

The IMF chief underwent medical examinations on Sunday. Police were looking for scratches or any other evidence of his alleged assault.

He was later charged with a "criminal sexual act, unlawful imprisonment and attempted rape". Police say the maid formally identified him in a line-up.

'Thunderbolt'

Until he was arrested, Mr Strauss-Kahn was considered a favourite to become the Socialist candidate for the French presidency next year.

Opinion polls gave him a good chance of defeating President Nicolas Sarkozy.

Socialist party president Martine Aubry described his arrest as a "thunderbolt" but called for Mr Strauss-Kahn to be presumed innocent.

Writer Tristane Banon alleges Mr Strauss-Kahn assaulted her in 2002

Mr Strauss-Kahn's wife, French TV personality Anne Sinclair, has also protested his innocence.

Meanwhile, another allegation against Mr Strauss-Kahn has emerged. A French writer says she may file a complaint for an alleged sexual assault in 2002.

Tristane Banon, 31, says Mr Strauss-Kahn tried to rape her when she went to interview him for a book she was writing.

"We're planning to make a complaint," Ms Banon's lawyer told AFP news agency. Mr Strauss-Kahn's lawyers have so far not responded to the allegation.

The European Union says the scandal should not affect bail-outs for eurozone countries.

The IMF has played a central role in organising rescue packages for the troubled economies of Portugal and Greece, and Mr Strauss-Kahn had been due to attend an EU finance ministers' meeting in Brussels to discuss the bail-outs.

The BBC's Chris Morris in Brussels says he has gained the trust of countries in Europe which are giving financial assistance, and those which are receiving it.

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