Dealership Charging Customers More For Paying Cash Backpedals After Public Shaming

While most people are accustomed to the idea of paying a fee when using their credit card for large transactions, one unsuspecting customer in Sydney, Australia, was in for a surprise. They found themselves facing an unexpected twist when they encountered a surcharge for making a cash payment at their local MG dealership.

A customer from the ‘Sydney City MG’ dealership, who goes by the name Peter, chose to share his experience with the radio station 2GB Sydney. Accompanied by a snapshot of the surcharges sorted by transaction type, Peter disclosed the following amounts imposed by the MG dealer:

The table appears normal until you reach the final line, which highlights the AU$55 (equal to US$35) surcharge for cash payments. Customers typically opt for cash payments to secure better deals and avoid additional charges, rendering this claim somewhat irrational.

This particular dealership permits a maximum cash payment of AU$5,000 (US$3,159), resulting in a cash surcharge of 0.01%. However, it’s worth noting that the fixed amount of AU$55 (US$35) is also applied to significantly smaller cash payments. For instance, according to Canstar, the average cost of a car service at the Sydney City MG is AU$226 (US$143). In such cases, customers opting to pay in cash would be subject to an irrational surcharge, amounting to a staggering 24.3% increase in the cost of their service!

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Yahoo Finance spoke with the dealer who explained that the amount of AU$55 (US$35) was nothing more than a handling fee, incorrectly labeled a surcharge. This amount was meant to cover the “internal costs of managing cash” since two people need to be present at the time of the purchase in order to count and safely transport the money to the safe before making a bank deposit.

Following the backslash, the dealership changed its policy and decided to “absorb” the cost of cash payments. In a statement to News.com.au, Syndey City MG spokesperson said: “Customers come first at Sydney City MG and the team prides themselves on exemplary service. It is for this reason and of our own volition that we have scrapped the $55 handling fee for cash payments and have begun looking through records to find customers who may have paid the fee so they can be refunded”

According to the government website of the Australian Competition & Consumer Commission, it is legal for businesses “to specify the terms and conditions that they will supply goods and services” including whether they will accept cash payments as long as they are “clear and upfront” about it. As such, the law doesn’t prohibit the addition of a surcharge to cash payments, although this is not something a customer expects to deal with.