Fitness First pays penalty after alleged payment breach

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Fitness First Australia has paid a penalty of $12,600 after the ACCC issued an infringement notice for an alleged breach of the excessive payment surcharge provisions of the Competition and Consumer Act 2010.

The ACCC issued the infringement notice after investigating concerns that Fitness First had imposed a 50 cent flat fee on memberships paid by direct debit from credit, debit and EFTPOS cards, between December 2017 and 5 April 2018. During this period, the fee exceeded Fitness First’s cost of processing payments for some customers on Fitness First’s ‘Passport’ membership rate.

The ACCC alleged in the infringement notice that Fitness First charged an excessive payment surcharge by imposing a 50 cent flat fee on a $46 fortnightly membership payment.  This equated to a charge of about 1.09% which was higher than Fitness First’s costs of processing the MasterCard debit payment, which was 0.81%.

“While there is nothing to prevent businesses from imposing flat fee surcharges if they wish, they must ensure the surcharge amount does not exceed their cost of acceptance for any given transaction,” ACCC Deputy Chair Mick Keogh said.

“Where a transaction is processed for a smaller amount, a flat fee surcharge can often become an excessive surcharge. This highlights the issues faced by businesses if they decide to impose a flat fee surcharge.”

“Businesses charging excessive payment surcharges, intentionally or not, do so at the risk of breaching the Competition and Consumer Act. The onus is on businesses that choose to impose surcharges to get it right,” Keogh said.

Fitness First cooperated with the ACCC’s investigation and, after being made aware of the ACCC’s concerns, took steps to review and amend its surcharging practices.

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