An excessive surcharge on card transactions has Nine Entertainment in the hot seat.
The post ACCC fines Nine Entertainment (ASX:NEC) for ‘excessive’ surcharges appeared first on The Motley Fool Australia. –
Shares in Nine Entertainment Co Holdings Ltd (ASX: NEC) fell from their good start today following news the Australian Competition & Consumer Commission (ACCC) is fining the media company for overcharging its customers.
After the news broke, the Nine Entertainment share price dropped 2.05% into the red to trade at $2.85 apiece. However, it has since recovered and is currently bumping along close to its previous closing price of $2.88.
The penalties imposed by the watchdog total $159,840 and are spread across 6 of the conglomerates’ subsidiaries.
Let’s take a closer look at Nine’s journey into the ACCC’s bad books.
According to an ACCC release, Nine Entertainment has been handed 12 infringement notices for allegedly charging “excessive” payment surcharges.
On top of the fine, Nine will be returning around $450,000 to affected advertisers, home delivery and digital subscription customers.
According to the ACCC, it holds concerns that Nine has been overcharging some customers since it merged with Fairfax Media in 2018.
During this time, surcharges of between 0.9% and 1.55% were added to Nine’s customer’s payments. The ACCC noted the surcharges imposed were between 0.09% and 0.84% more than it cost Nine to process the transactions.
The ACCC sent infringement notices to Fairfax Media Management, Nine Radio Operations, Fairfax Media Publications, NBN, Nine Digital, and Nine Network Australia.
As a result, Nine will return to around 220,000 subscribers a cash adjustment of $1.92 – the average excess payment surcharge. In some cases, it will offer subscribers an extension of their subscription. It will also offer to refund the surcharge to affected advertising clients.
According to the ACCC, Nine has now fixed the disparity in its surcharges.
Commentary from ACCC
ACCC’s deputy chair Mick Keogh commented on Nine’s infringements, saying:
A payment surcharge is excessive and in breach of the law if it exceeds the costs to the business of processing the payment.
While the average over-charge per consumer was relatively small, given the number of transactions processed by Nine, this added up to a significant amount.
Nine Entertainment share price snapshot
The Nine Entertainment share price has been performing well in 2021 – gaining 24% since the beginning of the year.
It’s also 107% higher than it was this time last year.
The company has a market capitalisation of around $4.9 billion, with approximately 1.7 billion shares outstanding.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Mastercard and Visa. The Motley Fool Australia has recommended Mastercard. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.