Are Convenience Fees Allowed in Debt Recovery

A lot of the time, when account receivable professionals are attempting to collect on a debt, they don’t want to collect on just the debt itself. Instead, they also want to charge a “collection” fee or “convenience” fee in addition to the debt amount.   

This leaves many consumers wondering whether or not the extra money they are being charged is legal and can often lead to lawyer inquiries and potential lawsuits if it’s not. What debt collectors need to be aware of is what the Fair Debt Collection Practices Act has to say about convenience fees or collection fees. It basically says that additional fees cannot be collected upon UNLESS they are “expressly authorized by the agreement creating the debt,” meaning the original agreement that the consumer signed when he or she took on the debt, or unless these fees are allowed to be charged by state law.

Thus, it is important for debt collectors to know the laws in the state where they do their business or where they are trying to collect on each debt they deal with. That way, they can be sure not to go against state law by tacking on convenience fees, collection fees, or other additional fees. They should also look at the original contract or agreement associated with each debt to see if these fees were mentioned and authorized in writing. It is also important for these fees, if allowed, to be reasonable and not exorbitant, as too-high fees can open up a host of other legal problems for debt collectors.

Debt collectors have to concern themselves with all kinds of laws and regulations in order to do business properly and to not have to worry about finding themselves and their businesses in court, and, while that may not be fun or fair, especially since few, if any, other businesses have to deal with such scrutiny, it is still the law and must thus be followed by debt collectors around the country.