ACCC PENALISING EXCESSIVE CREDIT CARD SURCHARGES

As advised in our December 2016 Newsletter the Competition and Consumer Act 2010 (Cth) (“the Act”) has been amended to prohibit businesses from imposing excessive credit charge surcharges on consumers.  These amendments came into effect for all businesses on 1 September 2017. 

Credit card surcharges are deemed excessive if they exceed the actual costs incurred by the business by accepting a payment by card.  The Reserve Bank of Australia (“RBA”) has set standards outlining the standard charges in relation to certain payment methods.  The current rates set by the RBA are 0.5% for a debit cards, 1-1.5% for a Visa or Mastercard credit cards and 2-3% for American Express cards.  The Act covers booking fees, transaction fees or convenience fees as long as the charge is in addition to the price of the goods or services and is a fee for processing payment regardless of the fee’s description.  The ban applies to all businesses that are based in Australia or who use an Australian Bank. 

Recently the ACCC has issued numerous penalty notices to various companies for breaching the excessive credit card surcharge ban.  On 17 October 2018 the ACCC issued a penalty notice to Lloyds Auctioneers in relation to a 2.25% flat surcharge to customers who made payments online using credit cards or debit cards.  In a press release, the ACCC stated that these surcharges were higher than Lloyds cost of processing the payments by up to 1.43% and that customers were excessively charged between $30 and $350.  Similarly, the ACCC imposed a penalty on Fitness First on 26 September 2018 in relation to a 50-cent flat fee charged by Fitness First on the $46 fortnightly membership payments when customers paid by credit cards or debit cards.  This amount was around 1.09% higher than Fitness First’s costs of processing.  There have been at least four (4) other ACCC media releases in relation to penalty notices issued by ACCC in relation to excessive credit card surcharging. 

If you have any questions in relation to your obligations regarding credit card surcharges, please do not hesitate to contact our office. 

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