Dáil debates

Wednesday, 30 April 2008

Priority Questions

Consumer Protection.

1:00 pm

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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Question 1: To ask the Minister for Enterprise, Trade and Employment when he will make a decision on the commencement of section 48 of the Consumer Protection Bill 2007 which states any trader should not impose additional charges upon consumers who wish to pay by credit card; and if he will make a statement on the matter. [16947/08]

Photo of Micheál MartinMicheál Martin (Cork South Central, Fianna Fail)
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The Deputy will be aware that sections 48 and 49 of the Consumer Protection Act 2007 seek to restrict the manner in which traders impose additional charges on consumers solely by reason of the method of payment chosen by the consumer. This issue first arose in the course of the passage of the Consumer Protection Bill through the Oireachtas. An amendment was proposed in the Seanad which sought to prohibit traders from imposing charges solely related to the payment method chosen by the customer by way of an extra amount of money, commonly referred to as a credit or debit card surcharge, a different price depending on the payment being made in cash or by credit card or debit card, or a handling fee for purchases made on the Internet depending on the method of payment.

The Deputy will also be aware that on the commencement of the Consumer Protection Act 2007 in May last year I did not commence sections 48 and 49 as I advised that it was my intention to conduct a public consultation on these provisions. In the course of that consultation my Department received almost 50 submissions on the impact of sections 48 and 49. The submissions gave rise to a number of complex matters which required legal advice, particularly regarding the compatibility of sections 48 and 49 with provisions of EU law.

These responses raised a number of specific issues upon which the Department sought the advice of the Attorney General. These issues related to the compatibility of sections 48 and 49 with EU law, specifically with the EU directive on unfair commercial practices and the EU payment services directive. The Attorney General's advice is that sections 48 and 49 are not compatible with the maximum harmonisation nature of the unfair commercial practices directive in that the sections seek to legislate within the field of consumer protection approximated by the directive. He argues that by going beyond what is permitted by the directive, the sections are not compatible with the maximum harmonisation nature of the directive.

As the Attorney General has advised that sections 48 and 49 are not compatible with EU law, I have decided not to commence these provisions. I am, however, committed to the importance of consumers being made aware of the fact that a trader imposes an additional charge based on the method of payment before transacting with that trader. My Department is currently examining the possibility of making regulations under the Consumer Protection Act obliging traders who impose payment method charges to include information on those charges in any advertisements for their goods and services.

In the course of the public consultation process retailers, in opposing the introduction of section 48, maintained that they were merely passing on to the cardholder the cost imposed on the retailer by the card companies for facilitating card transactions. The Deputy may be aware of the recent decision of the competition directorate of the EU banning Mastercard from requiring retailers to pay its multilateral interchange fee for facilitating Mastercard transactions. It is understood that the competition directorate has recently commenced similar proceedings against the other major payment card scheme Visa. In that context, I have sought the advice of the Competition Authority as to the implications of this decision and its effects in Ireland, particularly in terms of the likely impact on the costs to retailers of accepting payment by particular payment methods.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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I am a little taken aback by the Minister's reply. It was not what I expected and I imagine it was not what the Minister expected when the legislation was going through the House.

I have a very strong objection to credit card surcharges. Lots of retailers do not impose them. One can go to Brown Thomas and buy a suit for €1,000 and one will not be charged extra for using one's credit card. In fact, one will be given a discount if one uses Mastercard. Some retailers, particularly in the travel and airline industries, are imposing this unacceptable surcharge of 3% or more. Ticketmaster charges for credit card payments. NTL is doing something similar with debit. If their customers do not agree to pay by direct debit, they are charged more.

It was my understanding that when the Consumer Protection Act became law last year, such practices could become illegal. It appears from the Minister's reply that this is not the case because the relevant sections are in contravention of European law. If that is the case, then the Minister obviously cannot commence sections 48 and 49. When the legislation was originally drafted, was this not anticipated? When the Consumer Protection Bill was going through the House, why did the Minister not ensure that it was consistent with European law? That would have been a pretty obvious and basic step for the Minister and his Department to take.

Is there potential for a way around this problem? Can we amend the Act or introduce new legislation that would allow the Minister to ban the aforementioned practice. If the current legislation is inadequate, could alternative legislation be brought before the House? The Minister would have my party's co-operation in passing any such legislation very quickly, if possible.

Photo of Micheál MartinMicheál Martin (Cork South Central, Fianna Fail)
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I share the views of the Deputy regarding the unacceptability of these surcharges. During the course of the discussion and debate on the Bill in the Houses, a specific Senator raised the surcharge issue and pleaded with us to include a provision on it in the Bill. As the Deputy will understand, the timeframe was not as long or as wide as one would have liked in terms of going into the detailed legal implications of that move. However, the Bill went through the normal parliamentary processes.

There was a desire on all sides of the House to include such a measure, which is important to note. One must try to respect the cut and thrust of parliamentary debate and endeavour to facilitate the capacity of Deputies and Senators to propose amendments in the course of debate. Further, one must be open to accepting such amendments. If one was to take an overly-cautious view on everything, we could end up in a scenario where Parliament becomes virtually redundant.

In essence, we included sections 48 and 49 and——

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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Did the Minister not seek advice on them?

Photo of Micheál MartinMicheál Martin (Cork South Central, Fianna Fail)
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We did, of course. We then sought a public consultation on the sections because many people, external to Parliament, felt that they should have a say on the matter and be consulted on the provisions of these sections. My own view is that Parliament is supreme in these matters, ultimately, but we facilitated the consultation. In the course of that consultation, detailed questions arose about compatibility with the EU directive on unfair commercial practices.