Consumers freaking out after car dealership imposes extra fee for paying in cash

A Sydney car dealership has backpedaled after its $35 surcharge to pay in cash went viral, sparking outrage.

A local shopper, named Peter, was shocked to see the list of transaction fees at Sydney City MG car dealership in Alexandria in Sydney’s inner south.

The list, which was shared with the media, included surcharges of between 0.5 percent and two percent to pay with various types of cards.

But what sparked the outrage was the final surcharge — $35, if the buyer wanted to pay in cash.

Historically, cash payments have been a way to avoid a surcharge while making a costly purchase, a move that Peter said was jeopardized by charging an additional fee.

“If you’re going to go in there with cash, you’re going to do a bargain and you’re going to want a discount anyway for cash because it’s legal tender, there’s no fees,” he told 2GB Radio.

“And then they slug you with that? It’s an insult in any transaction.”

“[It’s] just so over the top and a bit ridiculous,” he added.

The maximum cash transaction allowed at the dealership was $3174, which worked out to be a 1.1 percent surcharge — a worse deal than the 0.5 percent charged for paying with a MasterCard debit card.

Further Sydney City MG charges $143 on average for a basic car service, according to car insurer Canstar.

That means a basic service would rack up a 24.3 percent surcharge if it were paid for in cash.

When contacted by Yahoo, the dealership explained the $35 cost was a “handling fee” to cover the internal costs of managing cash — like having two people on-site to count it and transporting it to the bank — and had “incorrectly labeled a surcharge”.

It said it will now begin absorbing the cost.

“Our customers come first,” Sydney City MG general manager Ian Zammit told the publication.

“If anyone has been charged the fee in the past, they will be refunded,” he added.

Groups of Aussies are increasingly concerned by the looming possibility of a cashless society, which could negatively impact low-income households and the elderly and mean people have less physical control over their money.

“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,” Jason Bryce, of advocacy group Cash Welcome, told Yahoo.

Is it legal to charge for cash payments?

In short, yes.

The Australian Consumer and Competition Commission (ACCC) told 2GB there was nothing in the Competition and Consumer Act or the Australian Consumer Law Act to stop a business from adding a surcharge to a cash payment.

“But the Australian Consumer Law prohibits businesses from misleading consumers about prices,” the ACCC said.

According to the ACCC’s website, Aussie businesses are not obligated to accept cash and may charge a surcharge for debit or credit card payments.

“If there is no way for a consumer to pay without paying a surcharge, the business must include the minimum surcharge payable in the displayed price for its products,” the website reads.