American Express is facing a legal challenge over credit card surcharges that are imposed by retailers, from a customer who has had a previous win in a complex credit card dispute with a major financial institution.
In a Victorian Supreme Court case, customer Jason Brighton-Stangstins claims a credit card contract from 2007 did not properly disclose the potential for merchant surcharges, which are added onto the cost of a purchase. Surcharges for Amex are commonly about 1.5 to 2 per cent.
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A key legal issue in the case is likely to be whether a surcharge is a fee that is connected to a credit contract, and if it is, whether it needs to be appropriately disclosed under the consumer credit code.
An amended statement of claim from Mr Brighton-Stangstins argues that a merchant service fee is "a fee or charge payable in connection with a credit contract."
It claims Amex was aware merchants could impose surcharges, and such fees should be disclosed on monthly statements and the original contract when a customer is taking out a card.
In its defence, Amex denies that surcharges are a fee in connection with a contract. Instead, it says surcharges are determined by the retailer, and are part of the purchase price.
An Amex spokeswoman declined to comment to BusinessDay on the case, as the matter is before the courts. She reiterated the credit card giant's opposition to credit card surcharges.
Mr Brighton-Stangstins, who is seeking damages, is also claiming Amex did not properly disclose all relevant fees and charges when he was pre-approved for a Platinum credit card in 2007.
His case was filed in May, and it is not the first time Mr Brighton-Stangstins has challenged a large financial institution over a credit card contract.
It is understood Mr Brighton-Stangstins instigated a complaint with the Financial Ombudsman Service which led to a $37 million compensation payment to 350,000 customers, which was outlined in the FOS 2016-2017 annual report, released in October this year.
In this case, Mr Brighton-Stangstins complained that a bank had failed to properly disclose that it would charge interest on previously billed interest, fees and charges.
The FOS annual report cited the case without naming Mr Brighton-Stangstins or the bank involved as an example of a "systemic issue," which required compensation for overcharged interest.
It is understood ANZ Bank was the institution involved. ANZ declined to comment.
The case comes after retailers have in recent years faced pressure to rein in excessive credit card surcharges from the Reserve Bank and the competition watchdog.
From September this year, small businesses ran the risk of copping fines in the thousands of dollars if their imposed surcharges that were higher than their costs from accepting that type of payment.