Prohibits fee charges for payment of an account regardless of the method of payment

BILL NUMBER:S6728A

Title of bill

An act to amend the general business law, in relation to prohibiting fee charges for payment of an account regardless of the method of payment

Purpose or general idea of bill

The purpose of this bill is to protect consumers from unfair payment fees.

Summary of specific provisions

This bill would prohibit any person or business entity from charging a consumer an additional rate or fee or a differential in the rate or fee associated with payment on an account, whether such payment is made by mail, electronic transfer, telephone authorization, or other means, unless such payment involves an expedited service by a service representative of the person, partnership, corporation, association or other business entity.

Justification

In recent months, there have been instances of major companies announcing plans to impose an additional fee on the accounts of customers that choose certain payment methods, such as one-time payments made online or over the telephone. Such payment fees unfairly penalize certain consumers and may disproportionately impact low- and moderate-income consumers. In today's world of highly-automated payment systems, the cost of processing payments is often nominal and considered a standard cost of doing business that is included in the total rate or amount charged for services. The recent emergence of proposals that would set payment fees at levels that appears to be significantly higher than the actual cost of processing payments has generated thousands of consumer complaints.

During these tough economic times, many consumers are struggling to pay their bills and must budget very carefully. These consumers should not be forced to bear the burden of an additional payment charge, unless expedited service is provided. Under this legislation, businesses interested in encouraging the use of certain payment methods may elect to implement incentive-based programs that do not penalize consumers. Several major companies have successfully convinced customers to use electronic billing by providing an incentive to switch from paper billing.

This legislation would expand upon the provisions of section 399-ZZZ of the General Business Law, which prohibits businesses from charging customers an additional rate or fee when the consumer chooses to pay by United States mail or received a paper billing statement. The bill's provisions are also consistent with the federal Credit C.A.R.D. Act of 2009, which similarly restricts the ability of card issuers to impose payment fees on cardholder accounts.

Prior legislative history

New bill.

Fiscal implications for state and local governments

None to the State.

Effective date

This act shall take effect immediately.