Red Balloon has been fined by the ACCC for excessive payment surcharges

Naomi Simson/ Supplied

Naomi Simson describes herself as a role model for small business, but the Shark Tank judge has been left red-faced after the competition watchdog fined her business for excessive payment surcharges.

The Australian Competition and Consumer Commission on Friday announced Red Balloon would have to pay a fine of $43,200 after finding it had overcharged some customers.

The online retailer sells “experiences” in Australia, such as skydiving jumps, wine tours, and cooking classes.

“As a role model in small business, compliance is really important and detail can often get you,” Simson told Fairfax Media. “Hand on heart this is not intentional. I am all about values and integrity and yet I still had something missing.”

The ACCC alleges that on 31 March and 30 June 2017, Red Balloon charged four consumers excessive payment surcharges for payments made by MasterCard credit, Visa credit, Visa debit and MasterCard debit, breaching the excessive payment surcharge laws in the Competition and Consumer Act 2010.

Simson founded Red Balloon in 2001 but says she has played a less involved role in the business more recently.

“When we came back into the business in June, the first thing we did was start looking at the devil in the detail and we have been very transparent with the ACCC,” she says. “I had no operational role at the time, yet you cannot let the detail get away from you.”

Red Balloon’s chief executive and chief financial officer have since been replaced.

“Clearly they were not looking at the detail,” says Simson. “When it comes to the surcharges every single card needs to be charged the right amount. You have to do every specific card type differently and we charged a single amount across the board.”

Simson says the fine will hurt.

“The penalty is tough, it’s a lot of money for any small business,” she says.

Under the excessive payments regime Red Balloon is classified as a large business with a turnover of more than $25 million, assets of over $12.5 million and/or more than 50 staff, but Simson says she was not aware Red Balloon fell under this definition.

“I didn’t realise,” she says. “We are technically right on the cusp, I still think of myself as a startup. We missed the cut-off by about $100.”

The ban on excessive surcharges has applied to large businesses in Australia for more than a year, commencing on 1 September 2016 but applies to all businesses including small businesses since 1 September this year.

Simson says she doesn’t know whether Red Balloon will suffer reputational damage as a result of the fine.

“Who knows? I don’t know, but what I do know is for a long time I have been a leader in our community and I think mistakes do happen, it’s how you fix them that counts. We have fixed the problem. It can happen to anybody.”

ACCC deputy chair Dr Michael Schaper says businesses can only pass on to customers the costs to accept a payment, including fees such as merchant service fees, and terminal rental and maintenance fees.

“If a business wants to impose a payment surcharge on card transactions, that business is responsible for ascertaining the cost of acceptance of the payment before imposing the surcharge onto customers,” he says.

Schaper says the ACCC has a number of other cases it is pursuing at the moment.

Red Balloon has lowered its payment surcharges to the correct amounts, and cooperated with the ACCC’s investigation.

This article was originally published on the Sydney Morning Herald’s Business Day. Read the original here, or follow Business Day on Facebook.

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