Hidden Fees - Consumer Law

Hidden Fees? Your Australian Consumer Law Rights

As a consumer, when you agree to pay for a good or service, you’re entering a contract with the business that provides the good or service that must be fair under Australian Consumer Law. Most of the time the type of contract that the customer and business enters into is called a standard form contract that is typically offered on a ‘take it or leave it’ basis.

Businesses need to ensure that the terms of the contracts that they offer to customers are fair because the Australian Consumer Law prohibits unfair contract terms. A court may interpret hidden fees and costs as unfair contract terms because they aren’t transparent.

Below is an introduction to various fees and charges that come up in everyday transactions and how to ensure that they are fair under Australian Consumer Law.

Cancellation Fees

Businesses need to ensure that any fees they charge for late cancellations are fair, transparent and reflect the actual costs they incur due to the cancellation.

Businesses should make sure that customers are aware of the cancellation fee before they book or pay. If customers aren’t aware of the cancellation fee beforehand, it may breach Australian Consumer Law.

Likewise businesses must charge a cancellation fee that is proportionate to the costs they incurred. This may include the cost of getting services ready or paying staff in preparation for the customer. If the cancellation fee is higher than the costs the business suffered, the fee is more likely to be interpreted by a court as a penalty, which the business generally can’t enforce.

For example, a hotel deposit may be forfeited in the event of late cancellation but it should generally not be more than 10% of the total cost of the room.

Sometimes businesses record credit card details when taking a booking. If they intend on charging the card if the customer cancels, then they must make the customer aware of this at the time of booking.

Component Pricing

Under Australian Consumer Law, prices must be displayed to consumers as a single, total figure including any taxes and other charges. Only delivery charges and optional extras can be displayed separately.

Surcharges

Food business public holiday surcharge

Restaurants, cafés and bistros may charge a surcharge on certain days. They must display the percentage of the surcharge and the days on which it applies prominently on the menu.

Surcharge for credit card transaction

Businesses may choose to pass on the cost of credit card transactions to consumers as a surcharge. However, the business must make sure that the consumer is aware of the surcharge and the extra cost before they pay or sign a contract.

Multiple displayed prices

If a business displays or advertises the same item at different prices, it must sell the item for the lowest displayed or advertised price. Alternatively, the business may choose to withdraw the item from sale until the discrepancy has been fixed.

Quotes – Your Australian Consumer Law Rights

Quotes versus Estimates

A quote is a definitive statement of the cost at which goods and/or services will be provided. A quote that has been agreed to becomes a contract that both parties are bound to.

A quote should be written (see below) and include:

  • A description of the work that will be done
  • The cost of materials and/or goods
  • The cost of labour
  • Any extra fees or levies (for example, the cost of dumping materials)

Sometimes a business will not be able to provide the customer with a quote until after they have examined the work needed. In these circumstances, the customer may ask for an estimate. An estimate is not binding on the parties. The total cost may be more or less than the estimate.

Call out fee

Businesses that charge a call out fee for providing a quote must tell the customer beforehand. Customers who aren’t told of the call out fee in advance don’t have to pay.

Get the quote in writing

Getting the quote in writing helps to avoid disputes later on and a written quote can also be used as evidence if there is a legal dispute. It is preferable that the customer and business sign the quote to ensure that both parties understand and agree to the terms of the quote.

Unforeseen costs

If a business faces unforeseen circumstances and needs to buy extra materials or do extra work that isn’t covered by the quote, they need to contact the customer for approval before continuing with the work.

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