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Fitness First fined for excessive card surcharges

Adam Zuchetti
Adam Zuchetti
26 September 2018 1 minute readShare
Fitness First

Gym chain Fitness First has paid a five-figure penalty after the consumer watchdog lashed out at its apparent overcharging of customers on card processing surcharges.

Under laws that came into effect from September 2017, businesses are banned from profiting off surcharges imposed on their customers for card transactions.

That means businesses can only pass on the true cost of processing card transactions, as stipulated by their bank.


Fitness First was issued an infringement notice for $12,600, after the ACCC determined it was imposing a 50 cent flat fee on memberships paid by direct debit from cards between December 2017 and 5 April this year, which, it said, exceeded the actual cost.

According to the ACCC, a 50 cent fee on a $46 fortnightly payment equated to around 1.09 per cent – higher than Fitness First’s cost of processing at 0.81 per cent.


“While there is nothing to prevent businesses from imposing flat fee surcharges if they wish, they must ensure the surcharge amount does not exceed their cost of acceptance for any given transaction,” ACCC deputy chair Mick Keogh said.

“Where a transaction is processed for a smaller amount, a flat fee surcharge can often become an excessive surcharge. This highlights the issues faced by businesses if they decide to impose a flat fee surcharge.”

Mr Keogh added: “Businesses charging excessive payment surcharges, intentionally or not, do so at the risk of breaching the Competition and Consumer Act. The onus is on businesses that choose to impose surcharges to get it right.”

Responding to the ACCC announcement, Fitness First said that all of its customers impacted by the overcharging will be reimbursed.



“Fitness First has credited all members who were impacted by incorrect surcharges being applied to certain transactions,” the company said in a statement provided to My Business.

The incorrect charges were discovered following the introduction of a new billing system [to meet new payment surcharge legislation]. The fixed 'per transaction' fee previously utilised by Fitness First for processing card payments had resulted in some members being undercharged and some members being overcharged.

Fitness First did not profit in aggregate from the historic procedure and has now implemented a new system of dynamic billing to ensure accurate cost recovery for specific card types.

No action will be taken in relation to members undercharged.”

The chain is not the first business to have faced compliance action under the rules, with infringements paid by Red Balloon in November 2017 and Cruisin Motorhomes in July 2018, while civil court proceedings are underway against Europcar over the issue.

Passing on these card surcharges is not mandatory, however.

In fact, homewares retailer House Group previously told My Business the company doubled its revenue by not imposing credit card surcharges on its customers – more than making up for the cost of absorbing those fees.

Fitness First fined for excessive card surcharges
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016. 

The two-time Publish Awards finalist has an extensive journalistic career across business, property and finance, including a four-year stint in the UK. Email Adam at [email protected]

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