The Federal Court has ruled that ANZ’s credit card late fees were penalty charges rather than a cost recovery measure. This is significant because, while businesses can recover the costs of late payment, they aren’t allowed to punish their customers for paying late in breach of a contract.
ANZ was charging $20 or $35 when the Court found the typical cost impost on banks is between 50 cents and $5.50, and was therefore, found to have been unfairly levying fees. Significantly the Court also ruled that customers should get a refund or reduction of the fees they paid.
Similar court action is pending against Australia’s other major banks.
Consumer Action suggests customers who feel they’re being charged an excessive late fee ask the business to justify the amount charged. If its response is unsatisfactory they can then escalate their complaint to an ombudsman service.
The Court’s ruling may be appealed by either side, but that shouldn’t stop consumers holding businesses accountable for their late fees – don’t let them pretend this ruling never happened.