Citibank to repay $5 million for inability to disclose A$ international transaction fees

Citibank to repay $5 million for inability to disclose A$ international transaction fees
31.03.2017 10:45 am

Citibank to repay $5 million for inability to disclose A$ international transaction fees

Credit Cards , Banking

Citigroup Pty Limited has to pay approximately $5 million to around 230,000 customers, for failing to properly disclose that credit card international transaction fees apply to Australian dollar transactions where the merchant uses an entity based overseas to process its transactions.

In early 2016, Citibank began charging international transaction fees for Australian dollar transactions made with merchants located overseas or where the merchant uses a foreign bank or entity to process transactions. This applied to Citibank-branded and white-labelled credit cards, including Virgin Money, Bank of Queensland and Suncorp Bank cards. While Citibank amended its disclosure about the changes to the fees, it failed to properly disclose that Australian dollar transactions processed by an entity outside Australia attracted the fees.

This may have led customers to believe that international transaction fees would be charged only when a transaction was made in a foreign currency or with an overseas merchant. For Citibank-issued credit cards, Australian dollar transactions with an Australian website where the merchant uses a foreign bank or entity to process transactions - attract international transaction fees.

Citibank has identified impacted customers of Citibank-branded and Citibank partner-branded credit cards, and has refunded customers with the amount of the fee charged plus interest. Citibank has also updated its disclosure to clearly state that Australian dollar transactions - where the merchant uses a foreign bank or entity to process transactions - will also attract international transaction fees.

Citibank will also refund over $48,000 to 30,174 Virgin Money credit card customers for charging an incorrect percentage amount of the international transaction fee. This error resulted in customers being overcharged by 0.1% of the transaction value.

This follows similar concerns with Westpac's credit cards, which resulted in 820,000 customers being refunded approximately $20 million in September 2016.

ASIC Deputy Chairman Peter Kell said, 'Financial product issuers must take care to provide clear disclosure to help consumers understand all circumstances where fees will be charged.'
ASIC's warning to consumers

ASIC continues to warn consumers to be mindful when making credit card transactions, because transactions in Australian dollars with overseas merchants, or processed by an entity outside Australia (that is, the merchant's financial institution or payment provider) can attract foreign transaction fees.

This is particularly important in an on-line shopping environment because foreign transaction fees may apply where a merchant’s website has an Australian address (domain name) or where a foreign merchant advertises and invoices prices in Australian dollars.

Consumers should check with the merchant whether the transaction they make is with an overseas-based merchant or processed overseas. Consumers with queries or concerns about the charging of credit card foreign transaction fees should contact their credit card issuer.

Related News

Swisscard Improves Early Collections, Reduces Net Credit Losses 40 Percent With FICO Analytics

Swisscard AECS GmbH, a leading credit card company in Switzerland, has optimized its early collections using FICO analytics leading to a 50 percent increase in revenue from... Read more »

FCA Rounds On Credit Card Firms Over Customers in Persistent Debt

The Financial Conduct Authority (FCA) has written to credit card firms telling them to review their approach to borrowers who are stuck in persistent debt, where they are... Read more »

Pleo Upgrades From Prepaid Cards To Credit Cards

Pleo is evolving – and perhaps the most important change is our new cards.

We’ve always offered a tool that made it easy for people to buy what they need to do their... Read more »

SoFi Is Partnering With Mastercard to Bolster Its Banking Offering With a Credit Card

The US-based fintech has teamed up with Mastercard for its new card network. Currently, SoFi offers a debit card product to users as part of its SoFi Money product via a... Read more »

Cornèrcard Launches Biometric Credit Card

Switzerland's Cornèrcard has teamed up with Gemalto and Visa to launch the country's first credit card featuring a biometric fingerprint reader.

To register a... Read more »

59% of Card-Present Transactions Globally Use EMV Chip Technology

Technical body EMVCo has published transaction data showing that 58.9% of card-present contact and contactless transactions globally were EMV®-enabled between July 2016 and... Read more »

Magazine
ALL
Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel