Onity sues New York to clarify servicing fee charge rules

This legal battle between Onity Group and New York regulators could change how you collect payments from your customers. At the center of the lawsuit is the legality of 'convenience fees'—specifically those charged when a customer pays their bill over the phone via an automated system or a live agent. New York claims these fees violate state debt collection and servicing laws. Onity argues that these are optional services for speed and convenience, not predatory charges. For retailers and operators, this case is a warning sign. If you offer financing or manage payment plans, your ability to pass on processing costs to the consumer is under a microscope. Regulators are increasingly viewing these small administrative fees as 'junk fees.' A ruling against Onity would likely trigger a wave of similar enforcement actions against other companies that charge extra for specific payment methods. You should review your current fee structures now. Ensure that any additional charges for phone or credit card payments are clearly disclosed and legally defensible in the states where you operate. If the courts side with the regulators, you may need to absorb these transaction costs or find alternative ways to incentivize digital, low-cost payment channels.

Source: American Banker — Top News

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