Nearly $145 million in fees illegally charged to NSW residents, government says

Nearly $145 million in fees have been wrongfully charged to NSW residents since 2016, according to the state government.

The Minns government has alleged the former Liberal-National government was charging merchant fees through Service NSW and Revenue NSW between February 2016 and December 2022.

It says more than 92 million transactions racked up a whopping $144 million in merchant fees.

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The charges included things like a 71c fee for a 3-year licence renewal, $1.92 surcharge on the registration of a basic car, like a Toyota Corolla, and a 29c surcharge on a marriage certificate.

The state government says the Crown Solicitor's Office told the former government three times that the fees were unlawful, but they continued to charge them to customers anyway.

The former Finance Minister Damien Tudehope today claimed he didn't know about legal issues surrounding the fees.

"Ministers should be told. I don't recall ever being told about this while I was finance minister," he said.

The illegal charges have been switched off for 90 per cent of payments, the state government said.

Merchant fees are surcharges used to recoup money taken by payment providers for the use of their systems, like a credit card surcharge.

Card surcharges themselves aren't illegal - but in this instance, the alleged payments would have been unlawful, because government agencies need to use a specific legal authority to charge merchant fees on card transactions.

Minister for Customer Service and Digital Government Jihad Dib said the current government's priority is to stop the charges "as quickly as possible".

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"It is deeply concerning that this practice has been ongoing, despite legal concerns being raised," Dib said.

"While the individual amounts typically charged may appear to be small, they have been charged unlawfully."

"The community rightfully deserves an explanation about how this was allowed to continue for so long under the previous government."

The government hasn't confirmed yet if anyone impacted would receive a refund.

Minister for Finance Courtney Houssos said she was made aware of the issue in September.

"Our immediate efforts are focused on switching off the payment methods that charge these merchant fees as quickly as possible.

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"We will get to the bottom of what happened and why millions of people were unlawfully charged merchant fees.

"Families, households and businesses expect governments to conduct themselves lawfully.

"That's why all agencies have been instructed to examine their own processes."

Concerns were raised after the issue was allegedly uncovered by the NSW Auditor-General, who then informed the government.

The allegations have now been put forward to the state's corruption watchdog.