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Australia imposes penalties for excess payment card charges

BIScom Subsection: 
Editorial Staff

Australia allows merchants to charge to customers reimbursement of the charges it pays to payment card companies. It is not permitted that surcharges are applied. A car rental company has been ordered to pay AUD350,000 in penalties for overcharging. Are airlines, including foreign operators, next in line?

On application by the Australian Competition and Consumer Commission to the High Court, CLA Trading Pty, the Australian division of global car hire company Europcar, has been ordered to pay AUD350,000 in penalties for overcharging customers who paid with cards. The ACCC’s proceedings only relate to the 96 outlets which are owned and operated by Europcar and not those run by franchisees.

The period during which the overcharging took place was short: in the case of credit cards, from July to August 2017 and in the case of debit cards, from July to November 2017. The company admitted the breaches of the Competition and Consumer Act 2010. A ban on charges over and above the actual cost charged to the merchant was introduced in stages: on 1 September 2016 for large businesses and then, on 1 September 2017, for all other businesses.

In a statement, ACCC said "Europcar charged surcharges of up to 1.43 per cent, although the rates varied over time and by the type of card. The company admitted that these surcharges were higher than it was being charged by its bank for accepting these payments. Europcar’s surcharges exceeded what it was legally permitted to charge customers by between 0.17 and 0.62 percentage points, depending on the card and the date the surcharge was applied. Banks and other payment processors are required to provide businesses with merchant statements which clearly set out the businesses’ cost of acceptance for each payment scheme. This requirement was introduced to assist businesses to easily determine their costs of accepting card payments." (edited for grammar)

ACCC has issued infringement notices to several other businesses for overcharging card users: RedBalloon, Cruisin' Motorhomes, Fitness First and Lloyds Auctioneers.

The action calls into question the policies of airlines which add card surcharges at the end of the booking transaction. Some airlines operating into Australia and selling tickets to Australians charge far in excess of the acceptance fee which they are charged by card companies. The ACCC has recently taken action against foreign businesses doing business online with those in Australia for a range of activities which it has deemed in breach of Australia's consumer protection legislation.