Welcome to Sisters In Law, news.com.au’s weekly column solving all of your legal problems. This week, our resident lawyers and real-life sisters Alison and Jillian Barrett from Maurice Blackburn advise about restaurant surcharges.
Question: I went to a restaurant over the Easter break and the number of surcharges they added was astounding. Not only did they add a 15 per cent public holiday fee to the total bill but they also added $1.50 for each transaction we made.
Then, the app we paid through automatically added a 20 per cent tip which we had to opt out of – and kept forgetting to do.
This keeps happening more and more when I go out, not only are prices high but there are lots of sneaky fees – I recently heard of a place in Sydney that added a “live music” charge to bills. Is all of this legal? – Carrie, Qld
Answer: Unfortunately Carrie, provided the venue displays these surcharges and fees prominently, clearly and transparently, they are doing nothing wrong.
There is no need for them to advertise these additional fees in neon lights outside the venue, nor for you to sign an agreement outlining all the charges before ordering. It is enough that they are “in the fine print” at the bottom of the page of the menu, or listed on the app you’re ordering from.
There is no limit as to how much extra a business can charge a customer in additional costs, provided the terms surrounding them are explicitly stated and don’t come as a surprise to you, the customer.
In relation to the additional $1.50 charge for each transaction made, this may not be legal but it will depend on the cost that the payment provider charges the venue.
The venue, or merchant, will incur a cost when they accept a debit or credit card payment from a customer. Different payment methods have different costs which why some venue elect not to accept payment by the more expensive cards (such as American Express or Diners Club).
A merchant is only able to pass on the actual cost they incur to the customer. Often these additional fees are expressed as a percentage by the payment provider (the bank or business providing, for example, the EFTPOS machine) and so venues elect to pass on that cost to the customer.
If merchants want to impose a flat surcharge across all credit and debit cards, it must be at the lowest rate on offer. That means if a debit card charges a 0.5 per cent fee, and credit card charges 2 per cent, the flat surcharge must be the lower rate.
Some additional costs such as ‘booking fees’ or ‘service fees’ which are common in the ticketing industry, can be legitimate and do not vary based on the payment method.
Regardless, merchants are still required to comply with the Australia Consumer Law and disclose these fees.
If you are concerned that you have paid an excessive payment surcharge (particularly because it was a flat rate of $1.50 for each transaction), then you can contact the Australian Competition & Consumer Commission (“ACCC”). The ACCC has investigation and enforcement powers over cases of possible excessive surcharging.
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This legal information is general in nature and should not be regarded as specific legal advice or relied upon. Persons requiring particular legal advice should consult a solicitor.
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