Qantas loophole revealed
(3 November 2009 – Australia) Qantas is taking advantage of changes made to the Trade Practices Act and is trying to conceal surcharge.
In May, the changes to the Act made it illegal to exclude unavoidable surcharges from advertised prices.
For the airline, this meant disclosing a A$7.70 card fee when purchasing with a credit card.
Qantas then made the announcement that it would be axing the fee for using Mastercard debit cards, this allows Qantas to hide the A$7.70 fee from other cardholder.
The loophole in question is available because by axing the Mastercard debit card charge the fee now becomes optional and the Act only requires you to advertise unavoidable surcharges.
Graeme Samuel, chairman of the ACCC, which polices the Act, said that the law as it has been passed says if it’s an optional extra it does not have to be disclosed.
Mastercard would like the RBA to cap surcharges at a cost, the current charge at A$7.70 can be a total of 9 percent of the total fare.
Normally surcharge cost is one percent for Visa and Mastercard credit cards and two percent for American Express and Diners; although, Qantas has stated that it doesn’t make any money from the transactions.
However, East and Partners financial market analyst, Zoran Knezevic, cited research on data on credit card surcharging for clients including the RBA which said the average surcharge among big companies had grown from 1.5 percent in 2004 to 2.25 percent.
Mr Knezevic said that Qantas had such market power it could do what it wanted.
They are not afraid of a massive consumer backlash, Mr Knezevic added.
For the airline, this meant disclosing a A$7.70 card fee when purchasing with a credit card.
Qantas then made the announcement that it would be axing the fee for using Mastercard debit cards, this allows Qantas to hide the A$7.70 fee from other cardholder.
The loophole in question is available because by axing the Mastercard debit card charge the fee now becomes optional and the Act only requires you to advertise unavoidable surcharges.
Graeme Samuel, chairman of the ACCC, which polices the Act, said that the law as it has been passed says if it’s an optional extra it does not have to be disclosed.
Mastercard would like the RBA to cap surcharges at a cost, the current charge at A$7.70 can be a total of 9 percent of the total fare.
Normally surcharge cost is one percent for Visa and Mastercard credit cards and two percent for American Express and Diners; although, Qantas has stated that it doesn’t make any money from the transactions.
However, East and Partners financial market analyst, Zoran Knezevic, cited research on data on credit card surcharging for clients including the RBA which said the average surcharge among big companies had grown from 1.5 percent in 2004 to 2.25 percent.
Mr Knezevic said that Qantas had such market power it could do what it wanted.
They are not afraid of a massive consumer backlash, Mr Knezevic added.
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