This time of year is associated with an increased use of credit cards, as spending amps up in preparation for the Christmas season. We recommend that clients keep an eye out for potential scams relating to credit card usage, and that business owners ensure they are fully compliant with the laws associated with receiving credit card payments.
One particular issue to be aware of is the frequent misuse of credit card surcharges by some businesses. The Australian Competition and Consumer Commission (ACCC) has banned all Australian businesses from charging customers excessive surcharges for using EFTPOS, MasterCard, Visa and American Express to pay for purchases. This ban came into effect following the decision in ACCC v CLA Trading Pty Ltd (trading as Europcar) where Europcar over-charged its customers more than $67,000 for using Visa and MasterCard debit cards to make a payment.
As a result of the ban, businesses can only charge customers what it costs them to process card payments for certain types of credit and debit cards. “[Y]ou are not allowed to add on any of your own internal costs when calculating what surcharge you will charge customers. The only costs businesses can include are external costs charged to you by your financial provider,” ACCC Deputy Chair Dr Michael Schaper is reported as saying.
The ACCC will allow businesses to charge a flat surcharge across multiple payment methods although, that surcharge cannot be an average and must be set at the level of the lowest payment method. The level of surcharge for each payment method is determined by the Reserve Bank of Australia.
Any breach of the ban can result in an infringement notice being issued by the ACCC or court action being commenced for pecuniary penalties, such as in Europcar where the Federal Court ordered Europcar to pay $350,000 in penalties for charging excessive surcharges. Our commercial team is happy to help individuals or business clients with any questions relating to lending or credit card usage and charges.