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Charged for using cash: Car dealership backflips on 'outrageous' surcharge

Experts fear the surcharge could set a dangerous precedent.

An under-fire car dealership has scrapped a controversial cash surcharge after a pile-on of feedback from outraged Aussies.

One Sydney local was gobsmacked while at the Sydney City MG car dealership after finding their list of transaction fees included a "ridiculous" $55 surcharge assigned for cash payments.

"[It's] just so over the top and a bit ridiculous," he told Chris O'Keefe on 2GB, who was also completely baffled by the charge.

"[It's] abusing what they can to make some extra money on the side".

Sydney City MG updated their fees within hours of receiving feedback about their 'cash surcharge'. Source: 2GB / Supplied
Sydney City MG updated their fees within hours of receiving feedback about their 'cash surcharge'. Source: 2GB / Supplied

The dealership explained the cost was meant to be a "handling fee" but had been "incorrectly labelled a surcharge". Despite this, Sydney City MG confirmed it would be absorbing the cost after the feedback.

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"Our customers come first," general manager Ian Zammit told Yahoo Finance.

What is a cash 'handling fee' for?

Zammit explained to Yahoo Finance that the handling fee was in place to cover the internal costs of managing cash, which include ensuring two people are present on site at the time of counting cash, and "safely" transporting it to the safe and the bank.

Experts 'concerned' over costs for using cash

Aussies have been threatened with a cashless society for a while now, with businesses like KFC, and even some banks, phasing it out altogether — something Cash Welcome advocate Jason Bryce said was "outrageous".

"Aussies are being charged to use our own money and I have a lot of concerns over the precedent that this cash surcharge might set," he told Yahoo Finance.

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Consumer expert, Joel Gibson, was just as troubled with the fee, telling Yahoo Finance that legal tender is being "attacked" left, right and centre.

“I accept that there's a cost involved when a business accepts cash — someone has to physically bank the money. But this is a trend that punishes the people in our community who can least afford it,” he said.

Dealership immediately removed fee after response

Just hours into the feedback rolling in, Zammit - who has only been general manager at Sydney City MG for one week - scrapped the $55 surcharge and began looking through records to find customers who could have paid the fee.

"If anyone has been charged the fee in the past, they will be refunded," he assured.

Sydney City MG told Yahoo they are 'absorbing' the cost for cash handling. Source: Supplied
Sydney City MG told Yahoo they are 'absorbing' the cost for cash handling. Source: Supplied

Is adding a cash surcharge legal?

An Australian Consumer and Competition Commission (ACCC) spokesperson told Yahoo there was nothing in the Competition and Consumer Act or the Australian Consumer Law Act stopping a business from adding a surcharge to a cash payment.

"However, when communicating prices to consumers through any methods, businesses must comply with the requirements of the Australian Consumer Law," they said.

"If the ACCC are green-lighting this, I encourage them to relook at the Payment System Board's regulations, which clearly expect merchants to provide a fee-free option for consumers," Bryce responded.

"We need some clearer regulations to protect vulnerable consumers from the shift away from cash," Gibson added.

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