Finance

Naomi Simson’s Red Balloon fined $43,200 by consumer watchdog: “It’s a very expensive lesson”

Dominic Powell /

Corporate gift company Red Balloon  has been fined $43,200 by the Australian Competition and Consumer Commission (ACCC) for allegedly overcharging four customers for “excessive payment surcharges” on credit card purchases.

The company, founded by Shark Tank investor Naomi Simson, was found to have fallen foul of the nation’s excessive surcharges ban which has applied to large businesses since September 2016, and recently came into effect for SMEs in September 2017.

However, speaking to SmartCompany, Simson said she wasn’t aware her business came under the definition of a “large business” as defined by the excessive surcharges law, saying to her Red Balloon “still feels like a startup”.

“I’ve always thought of [Red Balloon] as small, and there’s a number of different definitions of small business depending on what government authority you’re speaking to,” she says.

Simson was not directly involved with Red Balloon at the time of the issues, being on board only as founder and director. Both the chief executive and chief financial officer who were at the helm have since left the business.

In a statement, ACCC deputy chair Michael Schaper said the company was charging customers “more than allowed under the law prohibiting excessive payment surcharges on card transactions”.

“This provides that businesses can only pass on to customers what it costs to accept the payment, including fees such as merchant service fees, and terminal rental and maintenance fees.”

Four customers were charged a 1.5% surcharge instead of the accepted 1.2% surcharge, says Simson, reinforcing the incident was an honest mistake, rather than the company “trying to get an extra 20c from each customer”.

“As soon as we found out it was fixed, and we were very cooperative with the ACCC,” she says.

“That doesn’t negate that the chief financial officer at the time has a responsibility to read the legislation and make sure you’re compliant with it.”

“It’s a very expensive lesson.”

With only four customers being affected by the excessive surcharges, Simson suggests the company’s penalties may reflect some “tall poppy syndrome”, but nevertheless accepts that she and her company has to take responsibility.

However, she does view the legislation as further “red tape” for SMEs, especially ones on the cusp of being considered a large business.

“You’ve got to make sure you’re proactive around legislation – don’t just wait for the next newsletter to come around and tell you about it,” she says.

“We’ve definitely tried to stay on the front foot, but the time you spend understanding compliance is more time taken from trying to get customers.”

“Red tape issues for SMEs are material. This gives me a chance to talk more about responsibility, and advise businesses to get really good advisors around you to make sure nothing like this slips by.”

Never miss a story: sign up to SmartCompany’s free daily newsletter and find our best stories on TwitterFacebookLinkedIn and Instagram.

Advertisement
Dominic Powell

Dominic Powell is a journalist at StartupSmart and a tech and music geek. When he’s not writing, you can find him reading or browsing record shops.

We Recommend

FROM AROUND THE WEB

  • Malcolm Baker

    $43k for this much brand exposure and “looking good” – seems like a bargain 🙂

  • We really do need many more people to participate with the digital revolution, a few fat cats are cleaning up, meanwhile we have masses under-employed, and un-employed, the ‘Digital Ready’ program is a complete joke, and another example of ‘jobs for mates’.

  • Michael Ratner

    TALL POPPY rubbish.
    Watching A Current Affair and Today Tonight, I see toe-cutters, thieves, con people, charlatans – you name it – get away with murder et al other things.
    Not only is the fine absurd but the exposure given to this shows how the media are VERY willing participants.

  • Michael Ratner

    TALL POPPY rubbish.
    Watching A Current Affair and Today Tonight, I see toe-cutters, thieves, con people, charlatans – you name it – get away with murder et al other things.
    Not only is the fine absurd but the exposure given to this shows how the media are VERY willing participants.

  • Chris

    Forget about it and move on Naomi. Sounds like someone at the accc had an issue with you…$43k fine, how ridiculous!!

  • bezbox

    Yep – agree that the fine is ridiculous, especially over a 0.3% difference.

    Though this statement “Both the chief executive and chief financial officer who were at the helm have since left the business.” is not entirely true. The CEO and CFO for the March breach have left, but the current CEO was there for the June breach.

  • DIYfamily

    A fine of $43,200 for an honest mistake? This article reminds the average Australian wage-earner that it’s pointless pursuing your business dreams – and that political statements like “small businesses are the heartbeat of the nation” are just meaningless waffle.

    I am surrounded by friends who would be running thriving businesses today if it weren’t for red tape. ACCC, ATO, local government red tape. It doesn’t matter who issues it – it has the same strangling impact on small businesses

    A fine of this size also has a rippling effect on long term job creation. It makes everyday Australians decide that starting their own business is too risky. It makes them decide that it’s more viable to remain an employee. Or if they are unemployed it makes them decide that it’s safer to sit in the dole queue and wait for a vacancy than risk starting their own business.

    Naomi Simpson calls it an expensive lesson for her company. I call it an expensive mistake for the government. They will never know how much revenue they’ve missed out on by actively discouraging everyday Australians from starting businesses.