1. Credit Card Convenience Fees Charged by 3rd Party
Karen M. Scheibe Eliason
Vice President and Senior Counsel
ACA International
© 2018 ACA International. All Rights Reserved.

2. Credit Card Convenience Fees Charged by 3rd Party
General Rule for Adding Fees
Authorized by contract or agreement
Permitted by law
Source: FDCPA §§ 808(1) & 807(2)

3. Credit Card Convenience Fees Charged by 3rd Party
What does permitted by law mean?
→ Law may authorize (or prohibit) fees
→ If law silent, contract must authorize fee
→ If law prohibits, law will override contract

4. Credit Card Convenience Fees Charged by 3rd Party
What does authorized by contract mean? → Agreement “expressly” authorize → Exact fee does not need to be stated → Consumer needs to be a party → May not be prohibited by state law

5. Credit Card Convenience Fees Charged by 3rd Party
General Rule for NOT Adding Fees → Silence → Prohibited by law or contract

6. Credit Card Convenience Fees Charged by 3rd Party
Is it legally permissible to charge credit card convenience fees? → “General Rule” applies → FDCPA applies → Unlikely contract will expressly permit → Few state laws expressly permit → State surcharge laws may apply → Credit card companies may prohibit

7. Credit Card Convenience Fees Charged by 3rd Party
How much can I charge? → Most state laws do not address → Fee needs to relate to actual costs → Some credit card companies may limit fees

8. Credit Card Convenience Fees Charged by 3rd Party
What about collection or convenience fees charged by a third-party service provider for credit and debit card and bank draft payments? → Fee paid DIRECTLY to third-party → Collector does not receive any compensation → Some courts and states have ok’d

9. Credit Card Convenience Fees Charged by 3rd Party
How do I disclose credit card convenience fees in collection notices?
→ Must disclose
A fee will be charged
Amount of fee
Number of times fee will be charged
Reason for the fee
How the consumer can avoid paying the fee
Any other information required by law or contract
→ May be problematic is communication encourages fee-based payment option

10. Credit Card Convenience Fees Charged by 3rd Party
Compliance Considerations Overview
→ Exercise Caution
→ Advise of free payment options
→ Review contracts
→ Look closely at state law
→ Review regulatory interpretations and court decisions
→ Agency relationship
→ Contact your attorney to obtain legal counsel and advice.

11. Questions?