Citibank has paid back $5 million to 230,000 users of Virgin Money, Bank of Queensland Suncorp Bank and its own credit cards after failing to properly show fees charged on some foreign transactions.
Australia's corporate watchdog on Friday said Citibank began charging international transaction fees in early 2016 for transactions made in Australian dollars where either the merchant was located overseas or where the merchant used a foreign bank to process the transaction.
Citibank made disclosures about the fee changes but failed to properly state that Australian dollar transactions processed by overseas entities would attract the fees, the Australian Securities and Investments Commission said.
"This may have led customers to believe that international transaction fees would be charged only when a transaction was made in a foreign currency or with an overseas merchant," ASIC said in a statement.
The fees applied to Citibank-branded cards, as well as "white label" credit cards issued by Citi but branded for Virgin Money, Bank of Queensland and Suncorp Bank.
Citigroup is one of the world's largest credit card issuers and has 10 per cent of the credit card market in Australia.
The bank's credit card unit has sought to compete against the big four local banks by expanding through several white label partner arrangements.
ASIC said Citibank has identified the impacted customers and refunded them with the amount of the fee charged plus interest.
It has also updated its disclosure to clearly state that even Australian dollar transactions will attract international transaction fees if the merchant uses a foreign bank or entity to process transactions.
Citibank will also refund $48,000 to 30,174 Virgin Money credit card customers for charging an incorrect international transaction fee, ASIC said.
The Citibank refund follows a similar case in 2016 when Westpac was forced to refund $20 million to around 820,000 customers after wrongly charging fees for transactions processed by international companies, following a customer complaint.
