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ACCC pops Red Balloon for excessive credit card surcharges

RedBalloon-adventure-screenshotOnline retailer, Red Balloon, has been fined $43,200 for overcharging four customers in the first half of 2017, the consumer watchdog has announced.

The Australian Competition and Consumer Commission (ACCC) alleged the online trader, which sells ‘experiences’ like skydiving, wine tours and cooking classes, among others, has breached new consumer laws by charging “excessive” surcharges to some credit card customers when they made payments online in March and June this year.

“Red Balloon was charging these customers more than allowed under the law prohibiting excessive payment surcharges on card transactions,” ACCC deputy chair Dr Michael Schaper said.

“This provides that businesses can only pass on to customers what it costs to accept the payment, including fees such as merchant service fees, and terminal rental and maintenance fees.”

Red Balloon is classified as a ‘large business’ under the excessive payment surcharges provisions. The ban on excessive surcharges has applied to large businesses in Australia for more than a year, commencing on September 1, 2016. For all other Australian businesses, the new ban has applied since September 1 this year.

“If a business wants to impose a payment surcharge on card transactions, that business is responsible for ascertaining the cost of acceptance of the payment before imposing the surcharge onto customers,” Dr Schaper said.

“If a business is unsure what the cost of acceptance is for a particular payment method, it should contact its financial institution to obtain a copy of its annual statement.”

Dr Schaper said the excessive payment surcharges provisions now apply to all businesses, big and small, in Australia. Any business charging excessive surcharges on card transactions, whether intentional or not, risks ACCC enforcement action.

Red Balloon has since lowered its payment surcharges to the correct amounts, and cooperated with the ACCC’s investigation.

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