News & Insights

Since our last article on excessive credit card surcharges, dated 18 October 2016, the Australian Competition and Consumer Commission (ACCC) has put its foot down against businesses overcharging consumers when processing transactions. This has followed an extensive education period, which has seen the publishing of guidance material on the ACCC’s website, and the issuing of businesses with letters reminding them of the changes.

The ACCC has issued Red Balloon, an online trader which sells ‘experiences’ throughout Australia, such as skydiving and wine tours, with a $43,200 fine for breaching excessive payment surcharge laws, under the Competition and Consumer Act 2010.

An ACCC investigation revealed that on 31 March and 30 June 2016, Red Balloon charged four consumers more than was legally allowed for payments made using a credit or debit card.

Under the excessive payment surcharge laws, businesses can only pass on to customers what it costs to accept the payment, including fees such as merchant service fees, terminal rental and maintenance fees. Large businesses (companies which have more than $25 million in revenue or more than 50 employees) such as Red Balloon have had to follow these rules since 1 September 2016. For small businesses, the rules have been in place since 1 September this year.

The Court found that Red Balloon levied a surcharge on all transactions which was greater than the actual processing cost. Since the findings of the investigation, Red Balloon has lowered its payment to the correct amount and cooperated with the investigation.

Whilst Red Balloon’s surcharges did not grossly exceed the actual cost of the transaction, together, the revenues from all the customers overcharged was substantial. In issuing the fine, ACCC Deputy Chair, Dr Michael Schaper, stated it was important to deter the wider community, and reinforce that it was the responsibility of businesses to ensure they were imposing appropriate surcharges.

The finding goes to show the ACCC is cracking down on the implementation of the new surcharge laws, and that any transitional grace period, to allow time for education and compliance, has now passed.

Now is an ideal time to update your terms and conditions and review your payment surcharges, to ensure compliance with the revised legislation. If you would like to discuss the impact of the changes on your business, please contact Kelly Dickson.

This article was written by Annabelle Uebergang, Graduate Lawyer – Commercial.