The ACCC said consumers are angry at the lack of disclosure of add-on costs.
Australian Consumer Watchdog revealed that it receives at least 100,000 consumer complaints each year for businesses that apply additional practices without proper disclosure.
In a recent Parliamentary investigation, Rami Greiss, executive general manager of the Australian Contest and Consumer Commission (ACCC), said many consumers are unhappy with the unexpected add-on costs at checkout.
“Consumers are particularly concerned and appear to be upset when they complain equally about having add-on costs that lack of sales points disclosure feels unfair,” Grace told the Standing Committee of Economics.
This is because many businesses are applying additional card charges at checkout without properly notifying consumers, which makes them feel misunderstood and overcharged.
Australians were used to “unified pricing”
One factor contributing to frustration is the accustomment of Australian consumers to a unified pricing approach. This includes prices shown, usually include taxes, surcharges and handling fees.
This differs from the US and EU countries’ approaches, allowing you to charge multiple other types of fees in addition to the prices displayed to consumers.
Many Australians pay the total cost upfront and expect businesses to respond negatively when they charge additional fees at the point of payment.
Complaints are primarily aimed at small and medium-sized businesses.
According to Grease, the majority of complaints came to small businesses and micro businesses rather than businesses.
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However, ACCC Chair Gina Cass-Gottlieb said all complaints were not accurate.
“What we know is that consumers are looking at the estimates and the extent to which the Reserve Bank has placed on their website about what the (additional charge) costs are, and there’s a wide range of those costs,” she said.
“Sometimes we found is that consumers actually believe it is overcharged, but in reality the cost reflected the fee.
“That doesn’t mean it’s always the case, but it’s something we see very often.”
Cass-Gottlieb’s remarks were echoed by Greiss.
“I hear people get mad at the extra charges added to their purchases, which I understand, but they don’t necessarily disclose violations (of the regulations),” he said.
Australian card surcharge rules
In Australia, it is legal for businesses to charge a card surcharge if the amount does not exceed what the business costs to provide a credit card payment option to consumers.
However, charging additional fees for excessive payments is prohibited, and vendors must keep evidence to prove what the costs are based on.
If additional charges are inevitable, the company must explicitly include the additional charge in the price shown.
More cards added
Despite regulatory efforts, card searching is on the rise in Australia, despite still taking into account a small percentage of total card purchases by consumers.
“Data from one payment service provider suggests that around half of merchants in the hospitality industry increased in mid-2023,” he said.
Amidst the change, many Australian consumers say they dislike practices.
Australia’s plan to ban debit card extra fees
Australia is one of several Western countries that still allow extra cards.
In 2017, the EU prohibited all companies from charging additional charges for debit and credit card transactions, followed by the UK in 2018.
Some US states also ban or restrict practices.
Customers will use their bank cards to pay their purchase fees in Cardiff, UK on October 20, 2020. GEOFF CADDICK/AFP Getty Images
ACCC to implement education and enforcement approaches
Amid concerns about the company’s additional charring practices, Grease said the ACCC will implement a two-range approach – education and enforcement.
“Because there are necessary elements of education and compliance messaging, they (companies) understand their obligations to consumers in this process, and when they do the exercises, they understand what the obligations and rights under the law are,” he said.
“We will then look for any non-compliance violations and then take appropriate action.”
