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Admission Saves Kiwibank & NZPost From Prosecution

Voluntary Admission Saves Kiwibank And New Zealand Post From Prosecution

Kiwibank and New Zealand Post have reached a settlement with the Commerce Commission in relation to a breach of the Fair Trading Act 1986 over a failure to adequately disclose overseas currency conversion fees in on-line customer statements for Prezzy Card.

The Prezzy Card, which is a prepaid debit card valid for 12 months, was launched by New Zealand Post in November of 2006. Kiwibank manages the operation of the Prezzy Card on behalf of New Zealand Post.

The customer Terms and Conditions for Prezzy Card failed to adequately disclose that the currency conversion fees would be charged on every overseas currency transaction using the card. Although there was information about the charging of the 3.5% fee on the Prezzy Card website, this did not correct the failure to adequately disclose in the other important representations made to the customers.

Kiwibank and New Zealand Post have refunded $40,137.95 in currency conversion fees charged against the Prezzy cards between 4 November 2006 and 12 November 2007.

“The Commission has decided to accept a settlement with New Zealand Post and Kiwibank rather than prosecute because they came voluntarily to the Commission and admitted the breaches and have reimbursed all fees back to the affected customers,” says Commission Chair Paula Rebstock.

“We encourage all traders and individuals where they become aware that they are breaching the Fair Trading Act to take proactive steps in setting the matter right, including making full refunds," says Ms Rebstock.

"Depending on the circumstances, any such action is likely to be looked upon favourably in terms of deciding appropriate enforcement action".

However, Ms Rebstock says “The Commission is disappointed that the breach occurred at all given the action taken by the Commission in the last three years against nine financial institutions, including Kiwibank, over the need to adequately disclose these fees.”

“Kiwibank and New Zealand Post did not take sufficient care when launching the prepaid card to ensure full disclosure was being made. While information was provided about the currency conversion fees on the Prezzy Card website, it did not extend to the on-line statements, and there was only guarded disclosure in the customer Terms and Conditions,” says Ms Rebstock.

In the Commission's view one of the most important documents for disclosure is the customer statement. This view was confirmed on a number of occasions by the Court.

Under the terms of the settlement, Kiwibank and New Zealand Post will undertake corrective advertising to advise cardholders that their cards have already been credited with a refund of the fees, and that any unused fees still on the cards at the expiry of the cards will be paid to a consumer focused project. This will be subject to review by an independent auditor. Prezzy Card’s Terms and Conditions will also be amended to clarify the charging of the fees.


The fees. The ‘exchange rate’ used to convert foreign currency transactions into New Zealand dollars included a fee payable to New Zealand Post / Kiwibank of 3.5%.

Enforcement action to date: The Commission has previously taken action against nine financial institutions ; ANZ National Bank, BNZ, Westpac, Kiwibank, ASB, TSB, The Warehouse Financial Services, Diners Club and American Express for inadequate disclosure of currency conversion fees. With this settlement, a total of $24,923,188 in compensation has been paid to consumers, $3,776,000 has been paid in fines, and $550,000 has been paid to the Commission in costs.

  • ANZ National Bank Limited pleaded guilty to 45 charges of breaching the Fair Trading Act in March 2006 in respect of ANZ Bank and The National Bank of New Zealand. ANZ National was fined a total of $1.325 million and agreed to pay reparation of $10,000,000 and costs of $160,000.
  • The Bank of New Zealand pleaded guilty on 17 July 2006 to 21 charges of breaching the Act. It was fined $550,000 and agreed to pay costs of $80,000 and provide a compensation fund of $5 million.
  • Westpac pleaded guilty on 29 September 2006 to 19 charges of breaching the Act. It was fined $570,000 and agreed to pay $4.5 million in compensation and $80,000 in costs.
  • Kiwibank pleaded guilty on 16 May 2007 to five charges of breaching the Act. It was fined $134,000 and agreed to pay $172,051 in compensation and $10,000 in costs.
  • ASB pleaded guilty on 15 June 2007 to 26 charges of breaching the Fair Trading Act. It was fined $600,000 and agreed to place $3.5 million in a compensation and $80,000 in costs.
  • The Warehouse Financial Services reached a settlement with the Commission on 26 July 2007. They agreed to refund $120,000, the full amount of hidden foreign exchange fees on the company’s Value or Merit MasterCard cards.
  • TSB pleaded guilty on 3 September 2007 to 13 charges of breaching the Fair Trading Act. It was fined $280,000, and agreed to pay $151,000 in compensation to customers and $40,000 in costs in the Commission.
  • Diners pleaded guilty on 12 October 2007 to 3 charges of breaching the Fair Trading Act. It was fined $67,000 and agreed to pay $140,000 in compensation to affected customers and $20,000 in costs to the Commission.
  • American Express Limited pleaded guilty on 22 November 2007 to five charges of breaching the Fair Trading Act. It was fined a total of $250,000 and agreed to pay $1.3 million in compensation to affected customers. American Express will also pay $80,000 in costs to the Commission.


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