Westpac refunds $20 million in credit card fees
The latest in a string of ASIC-enforced retributions.
Westpac Banking Corporation has refunded approximately $20 million to 820,000 customers after incorrectly charging foreign transaction fees on Australian dollar transactions processed by overseas merchants.
The bank informed the Australian Securities & Investments Commission (ASIC) of the incident after receiving customer complaints.
Westpac then identified impacted customers and began providing refunds with interest. The bank also updated its disclosure terms to clearly state that Australian dollar transactions processed by overseas merchants may attract a foreign transaction fee.
Foreign transaction fees are generally calculated as a percentage of the Australian dollar value of the transaction (typically up to 3.5%). Both credit and debit cards can attract these fees.
ASIC warned Australians these fees may be applied even if the merchant's website has an Australian address (domain name) or prices are listed in Australian dollars.
"It may not always be clear to the consumer that the merchant 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.
"Equally, credit card issuers need to ensure that the disclosure of such fees is clear so customers understand the fees that they are charged when using their cards."
Earlier this week, ING handed over $5.38 million to around 24,500 of its members after acknowledging some of its promotional material was potentially misleading. ANZ is also refunding $28.8 million in fees to retail and business bank customers after charging unnecessary periodical payments.
These decisions highlight the importance of selecting a bank account that minimises fees and costs.
If you make frequent overseas purchases, shop around for cards that offers no foreign transaction fees.