Millions of NSW residents hit with illegal fees on government payments

Millions of customers were wrongly charged merchant fees for government transactions over a period of several years, despite advice that the surcharges were unlawful, NSW officials say.

An estimated $144 million in merchant fees has been unlawfully charged on 92 million transactions since 2016, the state government said Wednesday.

That was despite repeated legal advice advising that the charges for Service NSW and Revenue NSW transactions were unlawful.

The state auditor general discovered the issue while reviewing the department’s financial statements for the past fiscal year and brought it to the attention of government officials.

Merchant fees may be charged to recoup the costs of handling transactions, including to cover banking fees.

The individual costs were small, such as a 30 cent surcharge on a one-year license renewal.

The NSW Labor Government says it has set up an incident management taskforce and is carrying out urgent work to stop the charging of unlawful trader fees.

Members of the public who have been charged are encouraged to register for updates.

Several ministers have written to the NSW Ombudsman calling for an investigation into possible “serious mismanagement” following allegations made during the term of the previous coalition government.

The case has also been referred to the Independent Commission Against Corruption due to the apparent failure to follow legal advice from the Crown Attorney in 2016.

Merchant fees had since stopped on most transactions, including more than 80 percent of payments processed through Service NSW.

Customer Service Minister Jihad Dib said the immediate priority was to stop the charges as quickly as possible.

“It is deeply concerning that this practice continues despite legal concerns being raised,” he said.

“Although the individual amounts typically charged appear small, they were charged unlawfully.”