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Thursday, 7 December 2017

Are UK Retailers Ready for The Ban On Payment Charges To Customers?

As mentioned previously, UK retailers won't be able to charge their customers a fee for using most forms of payment from 13 January 2018, and must refund any charges that violate the ban or limit. Certain surcharges within the scope of the regulations will remain permissible, but must not exceed the actual costs incurred in accepting the relevant payment method.

Customers will have teeth. Any contractual term requiring payment of a problem fee will be unenforceable to the extent of the excess charged, and will be treated as requiring the excess to be repaid. These rights can be enforced in the courts or alternative dispute resolution schemes. Customers might also initiate chargebacks for the excess amounts via their card issuer (or make a claim against the issuer under section 75 of the Consumer Credit Act).

Local Trading Standards authorities will have to consider complaints they receive from payers concerning prohibited charges, and must then decide whether to apply for an injunction or any other appropriate relief or remedy against the relevant payee or to accept undertakings to avoid court action. They must also notify the Competition and Markets Authority of any undertakings or the outcome of proceedings taken, which will be publicised for their reputational impact.

In addition, the authorities may seek enforcement orders under the Enterprise Act 2002. Where there is collective harm, the court can restrain continued or repeated conduct. 

I should add that the above restrictions apply to any "payee", not just retailers, as well as to bank transfers and direct debits in euros. They also cover business “payers”, not just consumers. However, excluded from the ban are charges for using commercial payment instruments - issued to businesses, public sector entities or the self-employed and limited to use for business expenses where the payments are charged directly to their account. But charges for using those must only cover the cost to the retailer of using that specific payment instrument.

The restrictions have been introduced in The Consumer Rights (Payment Surcharges) Regulations 2012 by the Payment Services Regulations 2017.

Update on 15.12.17: The government has now published its revised guidance on the Regulations, taking into account the ban introduced from 13 January 2018, as well as how to calculate appropriate surcharges where they are expressly permitted.

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