Fitness First Australia pays $12K fine for alleged excessive surcharge

By @chelean on
American Express and MasterCard credit cards
American Express and MasterCard credit cards are shown in Washington June 25, 2008. Reuters/Jim Bourg

Fitness First Australia has paid a fine of $12,000 for allegedly breaching the excessive payment surcharge provisions of the Competition and Consumer Act 2010. The international fitness company cooperated with the investigation and amended its surcharging practices following the infringement notice sent by the Australian Competition and Consumer Commission (ACCC).

The health centre, which has 61 fitness clubs operating in Australia, was told it had imposed a 50 cent flat fee on memberships paid by direct debit from credit, debut and EFTPOS cards from December 2017 and April 5, 2018. The fee exceeded its cost of processing payments for some customers on its “Passport” membership rate.

According to the ACCC, Fitness First charged an excessive payment surcharge with its 50 cent flat fee on a $46 fortnightly membership payment. This means it imposed about 1.09 percent charge, which was higher than its cost of processing MasterCard debit payment of 0.81 percent.

Upon receipt of the notice, Fitness First cooperated with the ACCC’s investigation. It has since taken steps to review and amend its surcharging practices.

“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.”

He continued, “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.”

As ACCC notes, payment of a penalty specified in its infringement notice is not an admission of a contravention of the Competition and Consumer Act 2010.

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