The only way for consumers to avoid “admin fee” is to pay using Ryanair’s branded debit card – its controversial but is it legal?
Ryanair have announced that they will launch a new debit card in October and from 1 November 2011 customers will have to pay using this card to avoid paying Ryanair’s fee of £6 per flight per passenger (which adds up to £48 for a family of four on return flights).
Currently, Ryanair applies the same principle but passengers can pay using any Mastercard pre-paid card to avoid the charges. Limiting this to one Ryanair branded card is a significant limitation leaving consumers no choice but to buy that particular card or pay the extra charges – consumers are effectively prevented from shopping around for a Mastercard pre-paid card that suits them.
Which?, the consumer advocate, raised a ‘Super Complaint’ against payment surcharges and a particular focus of this complaint related to airlines. Which? estimates that £300 million was spent by consumers in 2010 on payment surcharges in the travel airline sector alone.
The Office of Fair Trading’s (OFT) response to this super complaint said that [under the current legislation]:-
- it is misleading to separate compulsory charges from the headline price. A payment surcharge is compulsory if a reasonable proportion of consumers have to incur additional costs/significant time to avoid paying them.
- Where there are surcharges there should be clear “1-click” information available to consumers on the level of charges applicable to different types of cards and any discounts available.
In the current regime Ryanair do however have an argument to say that consumers have the option to pay by Mastercard pre-paid cards which are readily available at no additional cost and on that basis it could be argued that the payment surcharge is not compulsory and so does not need to be included in the headline price. However, on the basis of the guidance from the OFT, this argument may become less viable when only customers with a Ryanair debit card can be excused the fee because the options available to the consumer are significantly more limited.
It will however be for the OFT to bring proceedings under the Consumer Protection from Unfair Trading Regulations 2008 if they consider Ryanair have mislead consumers by failing to include a compulsory charge in the headline price.
The OFT also made the further recommendation that legislation be implemented to ensure that:-
- Any costs the retailer incurs for processing debit card payments should be treated as part of the cost of doing business and included in the headline price (note that charges for other methods of payment can be charged separately. For example credit cards under the Credit Card (Price Discrimination) Order 1990).
This means that Ryanair’s (and other airlines) additional charging days may soon be over when the Consumer Rights Directive is implemented which seeks to limit the amount of any surcharge to the cost to the trader.
