The NSW government claims NSW residents have been charged $144 million in potentially illegal service fees since 2016, despite repeated legal advice it was unlawful.
In a statement on Wednesday, the state government claimed that an estimated 92 million transactions were “unlawfully incurred” from 2016 across Service NSW and Revenue NSW.
The issue was said to be identified during the NSW Auditor-General’s settlement of Department of Customer Service (DCS) financial statements for 2023-24.
“The current Secretary of DCS, Graeme Head, sought further information from his Department which revealed that Service NSW’s practice of charging merchant fees had been flagged as unlawful in legal advice received from the Crown Solicitor’s Office between February 2016 and December 2022. Despite this, merchant fees continued to be passed onto customers,” the government shared.
Merchant fees can be identified as surcharges that are used by businesses to recoup money taken by payment providers and their systems.
Although card surcharges aren’t illegal, the alleged payments would be considered unlawful as government agencies need legal authority to charge merchant fees on card transactions, as per 9News.
The charges included 30 cents for a 1-year license renewal, $1.92 to renew registration for a small car (such as a Toyota Corolla) and 29 cents for a marriage certificate.
The NSW government also claimed the former government was warned three times that the fees were unlawful, but continued to surcharge card-paying customers.
Following the allegations, Shadow Treasurer Damien Tudehope, who was the Finance Minister in the Perrottet and second Berejiklian ministries, told The Sydney Morning Herald that he had “never seen any such warning”.
“I’m not denying that [the advice] exists, but I don’t recall ever seeing any such advice, and if I had received any advice, I would have raised it immediately,” Tudehope said.
“If there’s an agency in possession of that crown solicitor’s advice, I’ve encouraged them to produce it.”
Former Minister for Customer Service and retired MP Victor Dominello also claimed he hadn’t seen such warnings and shared that merchant fees began in 2012.
“I have no recollection of ever being briefed on this matter nor the CSO advice mentioned in the article,” he told the publication.
“If I was ever informed of an unlawful practice I would have asked for it to cease immediately.”
Customer Service and Digital Government Jihad Dib said the government’s “most immediate priority has been to stop these charges as quickly as possible”.
“It is deeply concerning that this practice has been ongoing, despite legal concerns being raised,” Dib continued.
“While the individual amounts typically charged may appear to be small, they have been charged unlawfully.
“The community rightfully deserves an explanation about how this was allowed to continue for so long under the previous government.”
Minister for Finance Courtney Houssos also said that the government has established a task force to deal with this current issue.
“We will get to the bottom of what happened and why millions of people were unlawfully charged merchant fees,” Houssos said.
“Families, households and businesses expect governments to conduct themselves lawfully. That’s why all agencies have been instructed to examine their own processes.”
The accusations have now escalated to the NSW Ombudsman for further investigation as well as ICAC, for an “investigation into possible serious maladministration.”
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