Credit card surcharge legal on rent payment in Texas?

September 9, 2010 8:41 AM

Can my landlord charge a convenience fee for paying rent with a credit card (in Texas)?

From what I've found, most credit card companies seem to allow a "convenience fee" on CC transactions. And this seems to fall into the category of acceptable convience fees (not face-to-face, not a recurring charge, etc). But Texas specifically has a "no surcharge rule." (See http://law.onecle.com/texas/finance/339.001.00.html). YANML, but do you think I should I take the time to file a complaint? Or just pay with a check? (I want to pay with a CC specifically for the rewards, not just to cause trouble).

posted by anonymous to law & government (12 answers total)

Law seems clear enough. You can file a complaint online. "Be aware that this complaint and the information you provide are records open to the public under Texas Law. "

Possible outcomes:

1) Landlord discontinue accepting cards altogether. Bad for the people who currently rely on it, no difference for you.

2) Landlord eats the 3% or so fee that the credit cards charge him. Landlord loses, credit card users win. Seems unlikely.

3) Landlord figures out that he can provide a discount for cash, but not a surcharge for credit, and adjusts the leases going forward. Nothing changes for the renters, but probably too much for work for the landlord.

4) Landlord figures out it was you and is a pain in your ass.
posted by smackfu at 8:52 AM on September 9, 2010

The reason they charge a convenience fee is because they are the ones paying for your rewards. Retail stores just raise their prices to hide this (and make a little extra from those paying cash). Things like rent and taxes, though, are quoted in the actual amount of money that the seller wants to receive. So if you pay with a credit card for your convenience, they pass the cost of processing the transaction back onto you.

Dunno specifically about the legality of this in Texas, but I would be surprised if your landlord is legally required to buy your credit card rewards.
posted by jrockway at 8:53 AM on September 9, 2010

Even if surcharges are disallowed, cash/check discounts are not and are effectively the same in terms of what you'd be paying. So even if you reported the landlord all they'd have to do is change their wording to institute a cash discount instead of a CC surcharge.

You're not likely to find a CC reward program paying more than 2% these days so I don't see this working in your favor in any case (the only 5% cards I'm aware of at the moment are for specific categories like gas or restaurants), though YMMV I guess.
posted by reptile at 9:08 AM on September 9, 2010

Most Credit Card merchant agreements state that the merchant is not supposed to charge a fee for using a credit card. Landlord has probably been violating his card agreement and there's usually a form on the CC's website to fill out information if you would like to report that.

But with the recent Card Act, this may or may not change. I know it will change with regards to not accepting credit cards for a minimum purchase price.
posted by KogeLiz at 9:09 AM on September 9, 2010

I don't think the statute you've linked to is that clear -- it applies to "sales of goods and services." You're making a rent payment, which may not be buying goods and services under Texas law. The landlord is likely within his rights to not accept credit cards at all, which he may decide to do if you file a complaint, which gets you no rewards points and a pissed-off landlord. Rather than file a complaint, you might just talk to your landlord about this provision you've found and settle it more Texas-friendly-like.
posted by *s at 9:22 AM on September 9, 2010

Every merchant account agreement I've ever read says that a fee may not be charged for the use of a credit card to make up the interchange and various other fees that merchants pay. They are allowed to give a cash discount.

If I was your landlord and you complained to my merchant account provider or payment gateway, I'd simply stop accepting credit cards and make everyone write me checks and tell them all to thank you for removing the option of paying by credit card.
posted by Brian Puccio at 10:01 AM on September 9, 2010

There's really no upside in this for you. The statute you refer to doesn't allow a private cause of action, and if the "Finance Commission of Texas" investigates (the statute gives it exclusive jurisdiction), you might get reimbursed a few bucks, but you relationship with your landlord will go to hell. Also, I don't practice in this area, but my guess is that this isn't as clear cut as it appears (there are a number of businesses in Texas that prominently advertise their discount on cash/check payments, for example, Spec's liquor stores).
posted by seventyfour at 12:10 PM on September 9, 2010

I'd call the Austin Tenant's Council. They might have the answer: http://www.housing-rights.org/telephonecounseling.html
posted by megancita at 12:23 PM on September 9, 2010

there are a number of businesses in Texas that prominently advertise their discount on cash/check payments, for example, Spec's liquor stores

Yes, discounts for cash are allowed, but not fees for credit cards. Charging Extra For Credit Card Use
posted by smackfu at 12:30 PM on September 9, 2010

So it's basically a difference in nomenclature, right? The landlord calls it a "cash discount" so that cash/check costs 3% less, which is effectively exactly the same as charging a surcharge on cc payments. I'm honestly curious to see if anyone has ever been hit under that Texas statute seeing that it is only a penalty on those who aren't clever enough to evade it.
posted by seventyfour at 12:41 PM on September 9, 2010

I mean, this, from the link, is just silly:

In Texas, a business can not penalize you for paying with a credit card. Businesses that add a surcharge to those who pay by credit card might be violating provisions of the Texas Finance Code. However, businesses can discount the regular retail price of an item for consumers who pay cash. If you believe a business is charging extra for credit card purchases, please a file a consumer complaint with our office.
posted by seventyfour at 12:42 PM on September 9, 2010

It's a violation of his/her merchant agreement. You can report it directly with Visa (MasterCard has a similar form). Your landlord may be fined, and in the most extreme cases, their merchant account suspended, which would mean that you'd no longer be able to pay with a card.
posted by halogen at 5:35 PM on September 9, 2010