Landlords charging Centrepay transaction fees to vulnerable tenants against scheme policy

<span>Centrepay allows businesses early access to Centrelink payments before the money reaches a welfare recipient’s bank account.</span><span>Composite: Universal Image Group / Getty / Centerpay</span>
Centrepay allows businesses early access to Centrelink payments before the money reaches a welfare recipient’s bank account.Composite: Universal Image Group / Getty / Centerpay

Landlords are wrongly making vulnerable tenants cover the costs of administering the government-run Centrepay debit system, in one case passing it on to a blind disability pensioner.

A Guardian Australia investigation has revealed multiple failings with Centrepay, a system allowing businesses early access to welfare payments, prior to money hitting a welfare recipient’s bank account.

The system, designed to ensure recipients budget for essentials such as electricity and rent, has seen hundreds of thousands of dollars wrongly diverted from vulnerable Australians to a major energy company, AGL, and used to help prop up a disgraced Christian rehabilitation centre practising gay conversion practices and forced baptisms.

Multiple tenants unions have warned that, in some cases, landlords and real estate agents are passing on the costs they are supposed to cover for administering the Centrepay system.

Related: ‘Financial abuse’: how a debit scheme to help vulnerable Australians led to exploitation instead

Services Australia, the government agency that administers welfare payments, charges businesses a 99c transaction fee for each of the more than 23m transactions made using Centrepay each year.

Businesses are warned they must not pass on that fee to customers.

In one case, however, the Julalikari Aboriginal Corporation was caught passing on the fee to vulnerable tenants in Tennant Creek by deducting it from their rental payments.

The two tenants, a then 53-year-old on the disability support pension and her husband, a disability support pensioner who was blind and mobility impaired, took Julalikari to the Northern Territory Civil and Administrative Tribunal on a range of issues. The tribunal found the fee should not have been taken out of their rental payments.

The Tenants’ Union New South Wales chief executive officer, Leo Patterson, said it was not an isolated case. He said his organisation sees tenants complain about the behaviour from “time to time”.

Related: AGL was warned it was wrongly taking welfare payments from former customers but failed to act, court hears | Centrepay

“We usually see it added on to the rent rather than taken out of the rent,” he said.

“Generally, [community housing providers] and public housing aren’t passing it on; the problems tend to be with real estate agents or landlords in the private market.”

Ben Cording, the lead community eduction lawyer at Tenants Victoria, said financial counsellors in his state also had seen the fee being passed on. The low fee meant individuals were unlikely to challenge it themselves, meaning the problem went unaddressed legally.

“Over the years, we’ve definitely seen real estate agents [passing it on]. And it goes to real estate training. They look at Centrepay, they’ve never dealt with it before, they say ‘That’s a dollar we shouldn’t pay, let’s pass it on’,” Cording said.

“It should be a pretty straightforward matter but you’ve got to find a client who’s prepared to go into the Victorian Civil and Administrative Tribunal and navigate that. That’s where justice is really tricky in terms of being accessible.”

Patterson said the rule was difficult to enforce because it was risky to challenge a landlord on it and was “more expensive to take it to the tribunal than cop it”.

“There needs to be better protection around rent charging practices generally; there’s lots of benefits to agencies in terms of time-savings from third-party payments, including for Centrepay, but this [fee] shouldn’t be passed on to renters,” he said.

Julalikari did not respond to requests for comment.

Services Australia said it accepts that improvements need to be made to Centrepay.

“This is why the agency has commenced priority work and consultation to reform Centrepay policy,” spokesperson Hank Jongen said.

“We’re committed to seeing this process through and will have more to say in the coming weeks.”

“Businesses are not permitted to pass on Centrepay transaction fees to customers, and we investigate any claims of businesses breaching this policy.”