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ACCC penalises Fitness First for excessive surcharging on member payments

ACCC penalises Fitness First for excessive surcharging on member payments
March 4, 2019

Fitness First Australia has paid a penalty of $12,600 after the Australian Competition and Consumer Commission (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 last year after investigating concerns that Fitness First Australia Pty Ltd had imposed a 50 cent flat fee on memberships paid by direct debit from credit, debit and EFTPOS cards, between December 2017 and 5th 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%.

Commenting on the infringement notice, ACCC Deputy Chair Mick Keogh explained “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.

“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."

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.

This is the fourth time the ACCC has taken formal enforcement action against a trader for imposing excessive payment surcharges.

In November 2017, Red Balloon paid four Infringement Notices for excessive surcharging across four payment methods (MasterCard credit, Visa credit, MasterCard debit and Visa debit).

In July 2018, Cruisin Motorhomes, paid one Infringement Notice for imposing excessive surcharges on MasterCard debit payments.

In July 2018, the ACCC instituted civil proceedings against CLA Trading Pty Ltd t/a Europcar in relation to alleged excessive surcharges imposed across four payment schemes, being Visa credit, Visa debit, MasterCard credit and MasterCard debit.

The payment of a penalty specified in an infringement notice is not an admission of a contravention of the Competition and Consumer Act 2010 (CCA).

In February 2016, the CCA was amended to insert Part IVC, which deals with payment surcharges. The rules for determining permitted surcharges are set out in Reserve Bank of Australia Standard No. 3 of 2016, published on 26th May 2016.

Related Articles

28th September 2018 - Fitness First announces foundation partnerships with NRL Women’s Premiership and Touch Football Australia

6th June 2018 - ACCC fines Jenny Craig over misleading promotional campaign

15th March 2018 - Fitness First announces new digital experiences to motivate members

27th October 2017 - Fitness and Lifestyle Group acquires Go Health Clubs

28th August 2017 - ACCC commences legal action against ticket reseller Viagogo

2nd December 2016 - ACCC will not oppose Quadrant’s Fitness First acquisition

4th July 2014 - ACCC warns gyms about ‘No Contracts’ membership advertising

22nd February 2014 - ACCC to crackdown on online ticket booking fees

10th January 2014 - ACCC warns fitness businesses about the term ‘No Contracts’

31st October 2013 - ACCC to audit fitness franchises

26th August 2010 - Fitness First provides ACCC with ‘single price’ undertaking

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