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Westpac to make refunds of $20m to 820000 credit card customers

8 September 2016

Westpac to make refunds of $20m to 820,000 credit card customers

Westpac has today released $20 million in refunds to customers who were unfairly charged foreign transaction fees on Australian dollar transactions.

The refunds, which apply to about 820,000 of Westpac’s customers, were initially triggered by a Westpac customer complaint that highlighted the group of an incorrect foreign transaction charge relating to an Australian dollar transaction with an overseas merchant. Westpac informed corporate watchdog ASIC of the issue, with Westpac opting to refund similarly-affected customers, as its terms and conditions did not explicitly state such transactions would incur a fee.

The Australian Securities and Investments Commission said that from 2014, Westpac's terms and conditions had failed to disclose that customers would be charged a "foreign transaction fee" when they paid in Australian dollars to an overseas entity. This included banks located overseas, Australian dollar purchases from an entity outside Australia, and many types of online purchases.

"This may have led customers to believe that a foreign transaction fee would be charged only when a transaction was made in a foreign currency that required a conversion into Australian dollars at the time of the transaction," ASIC said.

Online shopping has led to a rise in overseas credit card spending in recent years, and the case is a warning to consumers about unexpected credit card fees, ASIC said.

A consumer can still be charged foreign transaction fees even if the merchant has an Australian website address, and even when they charge in Australian dollars.

"It may not always be clear to the consumer that the merchant or entity is located outside Australia, particularly in an online environment where the website uses an Australian domain name," ASIC deputy chairman Peter Kell said.

"We urge consumers to check whether the transaction they make is with an overseas-based merchant or processed outside Australia, especially when they shop online."

Westpac has now updated its terms and conditions to confirm that transactions processed through overseas merchants would incur a fee, regardless of the currency used in the process. Foreign transaction fees are generally charged as a percentage of the transaction value, typically up to 3.5% of the transaction. It is understood 80 per cent of the refunds paid by Westpac were less than $25.

This action follows a series of refunds to customers from the major banks, with ANZ’s decision this week returning $28.8m to almost 400,000 customers in relation to the incorrect charging of fees for certain periodical payments and ING's payout of $5.38 million to around 24,500 of its members, after acknowledging that some of the information in it's promotional mateerial was misleading. Whilst last week Commonwealth Bank’s high-profile stockbroker CommSec agreed to provide $1.1m in brokerage fees to customers in relation to an alleged breach of market integrity rules.

 

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