ASIC sues ANZ over misleading credit card balances

The Australian Securities and Investments Commission (ASIC) has commenced civil penalty proceedings in the Federal Court against big four bank ANZ for allegedly misleading customers about the available funds and balances in their credit card accounts.

ASIC alleged that between May 2016 and November 2018, around 165,750 ANZ customers were charged cash advance fees and interest for withdrawing or transferring money from their credit card accounts based on an incorrect account balance.

This was due to errors around how 'available funds' and 'current balance' were displayed on accounts which included amounts which had not been credited to the account balance and were not immediatedly available for withdrawal by the customers without any adverse consquence even though the account appeared to be in credit balance.

ASIC also alleged ANZ had not adequately fixed the problem and customers continued to be affected.

While ANZ has remediated over $10 million to customers who were affected up until 17 November 2018, ASIC was seeking orders from the Court that customers who had been wrongly charged since 2018 also be remediated.  

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ASIC deputy chair, Sarah Court, said: “We are concerned that, over a long period of time, ANZ overstated the available funds and balances on credit card accounts, and nonetheless charged fees and interest to customers who relied on this information when making withdrawals. 

“In some cases, single customers were charged thousands of dollars in fees while the average cash advance fees and interest charged per affected account was $47. 

“This alleged misconduct is the result of system errors within ANZ and a lack of effort to comprehensively fix these issues. We say that ANZ has been aware of the unlawful charging since at least 2018 and the problem is still occurring today.”

ASIC claims that ANZ: 

• Between May 2016 and September 2021, made false or misleading representations that where a customer’s ‘Current Balance’ and ‘Available Funds’ were in credit, the Current Balance would be available to the customer for withdrawal without incurring fees or interest; 
• Since 24 September 2021, engaged in conduct that is misleading or deceptive by representing that where the amount of a customer’s ‘Balance’ or ‘Funds’ was in credit, the Balance would be available to the customer for withdrawal without incurring fees or interest; and
• Has failed to do all things necessary to ensure the credit activities authorised by its Australian Credit Licence are engaged in efficiently, honestly and fairly.

ASIC was seeking declarations and pecuniary penalties from the Court and also seeks orders that require ANZ to implement a system change so that where a payment was made to a customer’s credit card account, it was not included in their funds or balance until that amount was cleared by ANZ and available to use without adverse consequences.  

The date for the first case management hearing was yet to be scheduled by the Court.