Credit card surcharges: 1200 per cent surge in complaints about flat fees for paying with plastic

AFTER a 1200 per cent surge in complaints about flat fees for paying by card, the consumer cops have started a crackdown on the now-unlawful surcharge.

Watch your pay-wave ... You don’t have to pay flat-rate fees for using your card anymore. Store owners can’t charge you more than it costs them to make a transaction.

THE consumer cops have begun a crackdown on those infuriating flat-rate card payment fees of up to $5 after a 1200 per cent increase in complaints.

Atop the Australian Competition and Consumer Commission’s hit list are restaurants, cafes and takeaway shops as well as newsagents. Last month it became unlawful for any merchant to add a surcharge any greater than what it costs to accept a payment by credit or debit card.

The new rules were applied to bigger businesses in September 2016. Since then the ACCC has run 30 investigations into major merchants’ surcharging practices. At least 10 have been made to change what they were doing, including carpark operators, car-rental agencies and hotels.

Here’s a snapshot of current and emerging scams targeting Australians, based on reports to Scamwatch last week pic.twitter.com/gEkQQcNymn

— Scamwatch_gov_au (@Scamwatch_gov) October 4, 2017

There are, however, some that haven’t fallen into line. It’s understood the ACCC is preparing to take legal action against as many as five large rogues although it would not confirm this.

That being said, the commission and consumers were generally pleased with the response from the big end of town, as can be seen from complaints statistics.

By August this year the ACCC was receiving as few as 17 inquiries per week.

But after the excessive surcharging ban was extended to smaller merchants last month that rose to 86 then 158 and 224 last week — an increase of 1217 per cent on August levels — with flat fees such as those the low-cost airlines once imposed again raising consumers’ ire.

The ban on excessive surcharges has delivered big wins on airfares. Source: ACCC

“One of the more prevalent practices that the ACCC is becoming increasingly aware of is businesses charging a ‘flat fee’ payment surcharge,” a commission spokeswoman said yesterday.

“This surcharging practice appears to be very common in the hospitality and newsagency industries in particular,” she said.

An example identified by News Corp Australia: a Cairns hotel’s restaurant continues to levy a flat $2 fee for payment by Visa or Mastercard and $5 for American Express or Diners. For a single diner who spent $30, that surcharge would be 6.7 per cent on Visa or Mastercard and 16.7 per cent on Amex.

“Charging a flat fee payment surcharge is problematic, especially when a transaction is processed for a smaller amount,” the ACCC spokeswoman said.

“The ACCC has sent out a significant number of warning letters to small businesses who charge flat fee payment surcharges, warning them that such conduct is likely problematic under the new excessive surcharging laws and urging them to review their practices.”

The reforms were ushered in by Treasurer Scott Morrison who told News Corp Australia yesterday that the “ban on excessive card surcharging is being strongly enforced to ensure Australian consumers are only being charged the fair price of a card transaction, not an inflated fee to profit gouge”.

Seen a suspect surcharge? [e-mail]

From the ACCC's guidance note on credit card surcharging. Source: accc.gov.au

What a merchant can’t do

* Impose a flat dollar amount on all card payments, unless that’s how their bank charges them

* Charge a percentage that is more than what it costs to provide the service

* Levy an average of what it costs to accept Visa, Mastercard and Amex

What a merchant can do

* Charge nothing

* Charge the same for Visa, Mastercard and Amex, as long as it’s no more than what it costs to accept Visa or Mastercard