Sky-high Velocity Global Wallet Fees Surprise Cardholders

Must know

  • Velocity Global Wallet program was discontinued and severed from Velocity Frequent Flyer in February 2021
  • In the original scheme, the inactivity fee was 0.5% of the account balance billed monthly after one year of card non-use
  • In April 2021, the fees for the renamed Global Wallet (less the “Velocity”) increased to 1.5% billed each week after 30 days without a transaction.

Customers of Virgin Airlines who still have money in their Velocity Global Wallet account recently suffered a brutal shock.

The Velocity Global Wallet program was discontinued in February 2021 following the downfall of Virgin in April 2020. The card was renamed the Global Wallet card at that time and no longer relates to the Velocity Frequent Flyer program.

Since then, card users no longer earn Velocity points and are charged ATM and transaction fees.

A Supplemental Product Disclosure Statement (SPDS) from Virgin dated November 2020 states that “we allow you to continue to spend your available balance until July 31, 2021 and redeem your funds beyond that date.”

(The airline reappeared in November 2020 and is now owned by investment firm Bain Capital.)

Inactivity fees are skyrocketing

It’s unclear how many cardholders actually heard about these changes, but the real shock has been the change in inactivity fees. In the November 2020 SPDS, they are listed at 0.5% of the account balance, billed monthly after one month of card non-use. Prior to the November change, cardholders only had to pay an inactivity fee after one year without a transaction.

Cardholders can now be billed more than ten times as much in inactivity fees

But the terms of the inactivity fee were updated in another SPDS dated March 2021: As of April 24, 2021, any account with no transaction in the previous 30 days was charged a whopping 1.5% of the balance. available on a weekly basis.

In a move intended to cause confusion, this March SPDS was to be read in conjunction with the November 2020 SPDS and the full Velocity Global Wallet product disclosure statement dated April 2020. The major increase in inactivity fees has been buried at the bottom of March. document.

CHOICE analyzed the numbers and found that a Velocity Global Wallet account with a balance of $ 1,000 and no activity more than six months before the April 2021 change would have been charged $ 30, bringing the account down to $ 970.

After the April change, a $ 1,000 Global Wallet account with no six month activity would be charged $ 325, bringing the balance down to $ 675. In short, cardholders can now be billed more than ten times the inactivity fee. Regardless of the account balance, the new inactivity fees are outrageous.

We have heard from a number of cardholders who have had hundreds of dollars taken from their accounts without their knowledge or consent.

This major change in terms and conditions in favor of the card issuer came as a big surprise to the Velocity Global Wallet customers we’ve heard of, who report large withdrawals from their accounts without their knowledge or consent. .

While Velocity Global Wallet communicated the change, many customers did not get the message. And that’s not surprising, given the confusing array of communications that may or may not have landed in cardholder inboxes.

A spokesperson for the financial services firm that issued the global Velocity wallet and now issues the global wallet, Cuscal, told CHOICE the change was communicated through an “extended multi-channel engagement plan” that has started in November 2020.

Unfortunately, many cardholders took no action and continued to have large balances, resulting in increased costs for processing manual redemptions.

Global Portfolio Spokesperson

“Details of the changes to the inactivity fee were communicated to cardholders in March 2021 as a notice of change,” the spokesperson said.

“All communications from November 2020 informed cardholders of the need to reduce their balances prior to product closure and were offered options to do so. Unfortunately, many cardholders took no action and continued to have large balances, which resulted in increased processing fees for manual redemptions. ”

In any case, Cuscal’s communications campaign left many cardholders in the dark.

$ 500 has disappeared

CHOICE staffer Narelle recently sounded the alarm on her husband’s behalf, saying “he has not received any alerts regarding the transaction on his account and no transaction records from Velocity. He has been hit. with $ 63 per week withdrawn from the account. “

“Being in a pandemic, we hadn’t really paid close attention to emails from Velocity and hadn’t noticed any emails regarding the changes,” Narelle added.

Narelle says she never received the updated SPDS from March 2021.

My husband took a look at the account and saw that they had withdrawn 1.5% of the balance every week since April, which is over $ 500

Elizabeth, Global Wallet client

Another Velocity client, Elizabeth, contacted in late August with a similar story about herself and her husband’s accounts.

“We both received an email on November 30 of last year saying the global portfolio program was on hold,” Elizabeth said.

“He didn’t mention any fees other than ATM transactions and withdrawals, and seemed laid back enough to withdraw your money. So we transferred our currencies to Australian dollars and put them on the back shelf, that’s ie to transfer the money. from the account soon. We forgot about it until the day before yesterday when my husband looked at the account and saw that they had withdrawn 1.5% of the balance every week since. April, over $ 500. I looked at mine to see the same thing happened to me, for a total of over $ 300. ”

No statements, no warnings

The heavy indents came out of the blue, Elizabeth says.

“With the exception of an email from December 1, 2020 indicating that our statements were available online, we had no communication from them after the November email. No account statement, no warning to withdraw our money, no warning that we were being charged an inactivity fee, nothing. If we hadn’t pulled our finger and checked, the money would have just been eaten. ”

Elizabeth called Velocity and a member of customer service told her that the program charged a high fee to encourage people to withdraw their money because it cost the company a lot to maintain the accounts.

Fortunately, Narelle and Elizabeth got their fees reimbursed when they complained.

We are concerned that the fees have increased significantly and that consumers are telling us they have never seen a clear disclosure of this change.

Senior Policy and Campaigns Advisor CHOICE Patrick Veyret

“In the rare event that we have received a complaint about charges, we have worked with Rev Australia [the product distributor] to examine the complaint and sometimes to reimburse the costs, ”the spokesperson for Cuscal told us.

No clear disclosure

Patrick Veyret, senior policy and campaign adviser for CHOICE, said Cuscal could be on the brink of a regulatory violation.

“Under financial services laws, companies must notify you of increases in fees or charges 30 days before the change takes effect,” said Veyret.

And while Cuscal said he did this, “the notice must give the account holder information reasonably necessary to understand the nature and effect of the change,” Veyret said.

“We are concerned that the fees have increased significantly and that consumers are telling us that they have never seen clear disclosure about this change. CHOICE will raise this issue with the financial regulator, ASIC, to ensure that the card issuing company has complied with the law. ”

How to avoid inactivity fees

Cuscal offers three options:

  1. Use the Global Wallet card to make purchases in Australia at least once every 30 days.
  2. Remove any funds remaining on the card.
  3. Transfer the balance to an Australian bank account.

“These options offer viable alternatives to cardholders in the current climate and under current restrictions,” the spokesperson said.

How to get your money back

  • Call Global Wallet on 13 18 75 (or +61 2 8667 5924 if you are outside Australia) and request reimbursement of your inactivity fees.
  • If the card issuer refuses to reimburse you, first file a complaint with Cuscal and then with the Australian Financial Complaints Authority on the grounds that you were not properly informed about the change in inactivity fees. .

About Hannah Schaeffer

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