Westpac has refunded $20 million after it failed to properly inform credit card customers they would be charged foreign transaction fees for overseas purchases made in Australian dollars.
The payments, to 820,000 customers, were triggered by a customer complaint over being charged fees for Australian dollar transactions that were processed by overseas merchants.
The bank had not properly explained to customers that they would be still charged foreign transaction fees in this situation, so it was forced to identify the hundreds of thousands of affected customers and refund fees, plus interest.
The Australian Securities and Investments Commission said that from 2014, Westpac's terms and conditions 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, Aussie 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.
Foreign transaction fees are generally charged as a percentage of the purchase price, typically up to 3.5 per cent of the transaction.
ASIC said Westpac had taken a cooperative approach, alerting the watchdog to its error, and changing its terms and conditions so the charges are now disclosed.
A Westpac spokeswoman confirmed the refunds had been paid, it had apologised for the error, and the bank's terms and conditions had been updated.
"We apologised to affected customers for any confusion or concern this may have caused in the past," the spokeswoman 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 says.
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.
"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."
Not all banks charged foreign transaction fees, Mr Kell said, and consumers who shopped online frequently should consider getting a card without these fees.Author: Clancy Yeates
Source: This story was first published at : http://www.smh.com.au