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Hotels blasted for pre-authorisation fee ‘scam’

Hotels blasted for pre-authorisation fee ‘scam’

credit card, swipe, payment

Australian hotel operators – particularly large multinational chains – have been blasted for their practice of adding surplus charges to guests’ credit cards and then delaying repayment of the funds.

A Fairfax Media columnist suggested this practice was effectively a scam and questioned the legality of the process.

The process – to which virtually all travellers are accustomed to – involves the hotel demanding a credit card at the point of check-in to load on so-called pre-authorisation charges, typically justified as security against minibar usage or damage to the room.

But the practice was blasted as being unethical and potentially illegal, given the lack of clarity about what these charges – which can vary anywhere from $1 to thousands of dollars chewing up the card’s usable limit – are actually for or how they are calculated.

In addition, it was claimed that rather than the amounts being automatically refunded upon checkout, hotels are dawdling and do not specify how long it will take for the charges to be refunded – potentially bleeding into days or weeks.

In one extreme example, it was alleged that a customer was woken in the middle of the night and ordered to vacate the room because their card bounced when these charges were piled on.

The ACCC expressed confusion about the issue and questioned whether the practice would fall under its legal remit. That was despite an ASIC spokesperson telling My Business that “conduct of merchants and retailers is generally regulated by the ACCC and State/Territory fair trading agencies”. 

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“ASIC does not have a role in relation to the decisions by merchants about how they require payments to be made or requirements for securing a booking.”

My Business has also reached out to Tourism Accommodation Australia, which also oversees the Australian Hotels Association, for comment.

Given the practice does not only impact individual consumers, with business travellers also slugged with the charges, we’d like to hear your experience and thoughts on the matter.

Have you had to pay these charges? How much were they? How long did it take for them to be refunded? Are you a hotel operator with inside knowledge on the matter? Share your insights below or email us at This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Hotels blasted for pre-authorisation fee ‘scam’
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