The Office of Fair Trading (OFT) has warned businesses to clarify consumer contracts and end “unwelcome surprises” from ancillary charges.
The OFT warned it will enforce regulations on firms that do not comply with consumer law after a study of 4,000 adults found one in five experienced a problem in the past year.
A report issued yesterday (Thursday February 24) does not name and shame companies, but the OFT said it would take action and referred explicitly to charges added to air fares. It said airlines may earn “excess profits” on charges for luggage and “have an incentive” to hide these
Ancillary charges have become standard among budget and leisure carriers in the past three years, with advertised fares seldom close to the price a customer will pay. The OFT appears ready to crack down on this.
The study of 32 areas of business found travel outside of a package holiday the fifth most-likely product or service to result in a problem for consumers – resulting in 7.3% of all reported difficulties. Package holidays were the ninth most likely on 5.1% of all problems.
The worst area was in telecoms and internet access. The OFT said add-on fees, such as “payments for taking luggage on an aeroplane” caused “consumer harm . . . [where] consumers miss, ignore or incorrectly assess these optional components”.
Its report states: “If consumers focus on headline prices . . . Firms may earn excess profits on these terms, and they can have an incentive to ‘shroud’ these terms.”
The 116-page report urges firms to review the small print in contracts. OFT consumer group senior director Helen Clayton said: “The report gives clear guidance to businesses and helps them to assess whether their contracts need revising to make sure customers are treated properly.”