Collector - September 2016 - (Page 46)

Cash or Credit? State and federal concerns for charging transaction fees. T ransaction fee, convenience fee, swipe fee-call it what you like, but the question remains as to whether or not debt collectors can legally charge this type of fee to consumers when processing a particular method of payment, such as credit cards, debit cards and payments by phone. The ability to charge a transaction fee is a question of both federal and state law, and one that has caught the eye of regulators and consumer attorneys. In order to impose any fees related to processing payments, debt collectors must familiarize themselves with relevant case law under the Fair Debt Collection Practices Act as well as any state restrictions that might apply. The FDCPA forbids "(t)he collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law." While this statement appears straight forward, courts do not agree on whether or not transaction fees are covered under this clause. Some courts perceive transaction fees as a separate agreement choosing the additional service of the payment method offered but some do not, causing a split in authority. Often times the collection agency does not receive any benefit from the transaction fee as the fee goes to the credit company. However, other courts have held that transaction fees are "incidental" to the debt and, therefore, should be considered covered under the FDCPA. An enforcement action by the Federal Trade Commission also signals that transaction fees are subject to the requirements of the FDCPA. The FTC alleged in its complaint that the defendants-a debt buyer and a debt collection law firm-violated the FDCPA by deceptively charging consumers a fee for payments authorized by telephone. According to the FTC, the debt collector led consumers to believe that the fee was unavoidable when, in fact, those who paid by mail or online did not incur the fee. State law may prohibit or restrict debt collectors or licensees from imposing transaction fees, such as in Colorado, Minnesota and Washington. Other states prohibit the imposition of "surcharge" fees when a "buyer" elects to use a credit card in lieu of payment by cash, check or similar means. Due to variances in state requirements, it's imperative that debt collectors review all applicable state laws before imposing a transaction fee. Overall, collectors should proceed with caution when it comes to charging fees. Reviewing state and federal laws will help debt collectors understand when they can or cannot add a transaction fee. ACA SearchPoint document #4006, Payment Transaction Fees, can help with this effort. The document takes a look at applicable federal law and court decisions and provides a breakdown of state requirements. Have you checked out ACA's member-only SearchPoint library? ACA SearchPoint is filled with documents that put important compliance information related to the FDCPA, FCRA, TCPA, state laws and many other topics at your fingertips. To access ACA SearchPoint, visit acainternational.org/searchpoint. 46 ACAINTERNATIONAL.ORG http://www.acainternational.org/searchpoint http://www.ACAINTERNATIONAL.ORG

Table of Contents for the Digital Edition of Collector - September 2016

Upfront
Industry News
Best Practices
FYI
Collection Tips
5 Ways to Get Electronic Payments Right
Making the Connection
Curious About Amicus Curiae?
Calendar
Honor Roll
Small Talk
Know the Score
What Creditors Need to Know About the TCPA
ACA Industry Advancement Support Helps Secure Victory for Collection Industry in FDCPA Case
Compliance
ACA SearchPoint
Last Word

Collector - September 2016