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U.K. Treasury Plans Curbs on Excessive Credit-Card Charges

Dec. 23 (Bloomberg) -- The British Treasury plans to stop airlines, retailers and other companies from levying excessive fees on customers paying with credit and bank cards by limiting the amount they charge to the cost of the transaction.

Consumers “have the right to understand the charges they may incur up front and not be hit through a hidden last-minute payment surcharge,” Treasury minister Mark Hoban said in a statement released by his office in London today.

The Office of Fair Trading, the U.K.’s antitrust regulator, said in June that the law should be changed. A three-month investigation found evidence of “drip pricing” surcharges that cost U.K. consumers 300 million pounds ($470 million) in 2009 in the airline industry alone, the OFT said.

The Treasury will consult business and consumer groups and plans to have legislation in place by the end of next year, according to today’s statement. Interviewed on BBC Radio 4 today, Hoban rejected accusations that the process was taking too long, saying the government wants to make sure the rules aren’t rushed and are clear for consumers.

Which?, a consumer-rights group, said in a statement that the move will be a “huge victory” for shoppers and called on companies to “be up front” about charges immediately and not wait for legislation. Which? filed a so-called supercomplaint with the OFT in March about the practice, singling out taxi services and low-cost airlines as surchargers.

Hoban said it’s important that “the OFT does actually take enforcement action” when companies break the rules in the future.

To contact the reporter on this story: Gonzalo Vina in London at gvina@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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