Need to know
- The Velocity Global Wallet scheme was wound down and severed ties with Velocity Frequent Flyer in February 2021
- In the original scheme, inactivity fees were 0.5% of the account balance charged monthly after a year of not using the card
- In April 2021, the fees for the re-branded Global Wallet (minus 'Velocity') jumped to 1.5% charged weekly after 30 days without a transaction
Virgin airline customers who still have money sitting in their Velocity Global Wallet accounts have been getting a rude shock lately.
The Velocity Global Wallet scheme was wound down in February 2021 in the wake of Virgin's fall into administration in April 2020. The card was renamed the Global Wallet card at that point and no longer has any connection with the Velocity Frequent Flyer program.
Since then, card users have no longer been earning Velocity points and have been charged ATM and transaction fees.
A Virgin supplementary product disclosure statement (SPDS) dated November 2020 says "we are allowing you to continue to spend your available balance until 31 July 2021 and to redeem your funds beyond such date".
(The airline re-emerged in November 2020 and is now owned by the investment firm Bain Capital.)
Inactivity fees leap skyward
How many cardholders actually caught wind of these changes is unclear, but the real shocker has been the change in inactivity fees. In the November 2020 SPDS, they're listed as 0.5% of the account balance, charged every month after a month of not using the card. Before the November change, cardholders were only charged inactivity fees after a year of no transactions.
Cardholders can now be charged more than ten times more in inactivity fees
But the inactivity fee terms were updated in another SPDS dated March 2021: From 24 April 2021, any account with no transactions in the previous 30 days has been charged a whopping 1.5% of the available balance on a weekly basis.
In a move bound to cause confusion, this March SPDS was meant to be read in conjunction with both the November 2020 SPDS and full Velocity Global Wallet product disclosure statement dated April 2020. The major inactivity fee increase was buried down at the bottom of the March document.
CHOICE crunched the numbers and found that a Velocity Global Wallet account with a $1000 balance and no activity over six months before the April 2021 change would have been charged $30, bringing the account down to $970.
After the April change, a $1000 Global Wallet account with no activity over six months would be charged $325, bringing the balance down to $675. In short, cardholders can now be charged more than ten times more in inactivity fees. Regardless of the account balance, the new inactivity fees are exorbitant.
We've heard from a number of cardholders who've had hundreds of dollars taken from their accounts without their knowledge or consent.
This major change of Ts and Cs in the card issuer's favour came as a big surprise to the Velocity Global Wallet customers we've heard from, who report sizable withdrawals from their accounts without their knowledge or consent.
If Velocity Global Wallet communicated the change, many customers didn't get the message. And that's not surprising, given the confusing array of communications that may or may not have landed in cardholders' inboxes.
A spokesperson for the financial services firm that issued the Velocity Global Wallet and now issues the Global Wallet, Cuscal, told CHOICE the change was communicated by an "extensive multi-channel engagement plan" that started in November 2020.
Unfortunately, many cardholders have not taken action, and continued to carry significant balances which has resulted in increasing costs to process manual redemptionsGlobal Wallet 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, have instructed cardholders of the need to reduce their balances prior to the product closure and were given options to do so. Unfortunately, many cardholders have not taken action, and continued to carry significant balances which has resulted in increasing costs to process manual redemptions."
In any case, Cuscal's communication campaign has left many cardholders in the dark.
$500 gone missing
One CHOICE staffer, Narelle, recently raised the alarm on behalf of her husband, saying "he has received no alerts of the transaction on his account and no transaction statement from Velocity. He was being hit with $63 a week taken out of the account."
"Being in a pandemic, we hadn't really been paying close attention to the Velocity emails and hadn't noticed any emails regarding the changes," Narelle added.
Narelle says she never received the updated March 2021 SPDS.
My husband had a look at the account and saw that they had been taking out 1.5% of the balance every week since April, over $500Global Wallet customer Elizabeth
Another Velocity customer, Elizabeth, got in touch in late August with a similar story about her and her husband's accounts.
"We both received an email on 30 November of last year saying that the global wallet program was being discontinued," Elizabeth says.
"It didn't mention any fees other than for transactions and ATM withdrawals, and seemed pretty laid back about taking your money out. So we transferred our currencies into Australian dollars, and put it on the back shelf, meaning to transfer the money out of the account soon. We forgot about it until the day before yesterday, when my husband had a look at the account and saw that they had been taking out 1.5% of the balance every week since April, over $500. I looked at mine to see that the same thing had happened to me, totalling over $300."
No statements, no warnings
The hefty withdrawals came out the blue, Elizabeth says.
"Except for one email on 1 December, 2020 saying our statements were available online, we had no communication from them after the email in November. No account statements, no warnings to get our money out, no warning that we were being charged inactivity fees, nothing. If we hadn't pulled our finger out and checked, the money would have just been eaten all up."
Elizabeth called Velocity and was told by a customer service person that the program was charging the steep fees to encourage people to take their money out because it was costing the company a lot to maintain the accounts.
Fortunately, both Narelle and Elizabeth had their fees reimbursed when they complained.
We're worried that fees have jumped significantly and that consumers are telling us that they never saw any clear disclosure about this changeCHOICE senior policy and campaigns adviser Patrick Veyret
"In the few instances where we have received a complaint regarding the fee, we have worked with Rev Australia [the product distributor] to review the complaint and on occasions reimburse the fee," the Cuscal spokesperson told us.
No clear disclosure
CHOICE senior policy and campaigns adviser Patrick Veyret says Cuscal may be skirting close to a regulatory violation.
"Under financial services laws, companies have to give you notice of increases in fees or charges 30 days before the change takes effect," Veyret says.
And while Cuscal said they did this, "the notice must give the account holder the information that is reasonably necessary to understand the nature and effect of the change," Veyret says.
"We're worried that fees have jumped significantly and that consumers are telling us that they never saw any clear disclosure about this change. CHOICE will be raising this matter with the finance regulator, ASIC, to make sure the card company has complied with the law."
How to avoid the inactivity fee
Cuscal offers three options:
- Use the Global Wallet card to make purchases within Australia at least once every 30 days.
- Withdraw any remaining funds on the card.
- Transfer the balance to an Australian bank account.
"These options provide viable alternatives to cardholders in the current climate and under the 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 that your inactivity fee charges be reimbursed.
- If the card issuer refuses to refund your money, file a complaint first with Cuscal, then with the Australian Financial Complaints Authority on the basis of not having been properly notified about the change in inactivity fees.