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Ryanair has been sanctioned to the payment of an € 400K fine as their advertised flight fares were not inclusive of an additional cost for the usage of credit cards whose charging has been in any case deemed in breach of applicable regulations.
The Italian competition authority which has jurisdiction also on misleading advertising and unfair commercial practices had held in 2011 that, among others, the conduct undertaken by Ryanair in charging an “additional admin fee” for payments via credit card was in breach of Italian law provisions which prohibits advertising practices concerning flight fares referring to prices net of expenses, taxes and additional costs that are not clearly mentioned in the offer.
Subsequently, in 2012 the authority held that Ryanair had continued that challenged conduct but the company undertook to comply with the authority’s decision by the 1st of December 2012. However, the authority has now reached the conclusion that Ryanair had not complied yet with its decision in the period between the 1st of December 2012 and the 2nd of February 2013 through the charging of a 2% “credit card tax” that was not included in the advertised price.
The authority in its decision referred to Italian provisions implementing the EU Payment Services Directive according to which “the beneficiary [of the payment] cannot charge expenses to the payer for the usage of a specific payment means“. Therefore the position of the authority is that it is not possible to charge any fee for the usage of payment means. On the contrary it is possible to apply a discount in case of usage of a specific payment means.
On the basis of the above, as of the 2nd of February 2013 Ryanair started advertising a price inclusive of the fees for payments through credit card, but referring to a 2% discount in case of payments through debit card. The new approach followed by Ryanair has been deemed by the authority compliant with applicable laws but they decided to sanction the company for their prior lack of compliance with its order.
This decision creates a precedent which is applicable not only for any e-commerce operator (including for instance gambling operators) but also in relation to any advertised business as we mentioned in a recent post concerning franchising arrangements. The price inclusive of any potential cost shall be disclosed to consumers from the first contact with them through the advertising material and no fees can be charged for the usage of payment tools.
We will see whether this approach will be confirmed by subsequent decisions, but in the meantime if you want to discuss the above feel free to contact me, Giulio Coraggio.
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