Long Island villages charging 7% credit card fees for online ticket payments

In an era of easy e-commerce, some villages are charging residents approximately 7% credit card surcharges to pay tickets online — which consumer advocates called “junk fees.”

Spencer Sheehan was shocked by the $23.72 service fee tacked onto the $325 Great Neck Estates village traffic citation he paid online earlier this year.

While the village website clearly stated a 2.99% fee for paying in person with a credit card, he said there was no mention of the online charge until he was ready to click pay.

“I thought that was predatory and it was excessively high,” said Sheehan, a Great Neck attorney who has fought for consumer issues.

Sheehan blames the village for partnering with a third party software and payment provider, nCourt, an Alpharetta, Georgia-based company that processes the credit card transactions and charges 6.99%, plus an extra $1 that it passes along to the state, according to a company spokesperson. Cedarhurst and Southampton villages also use nCourt, according to the village officials, who acknowledged the 7% fee.

Surcharges for private businesses tend to fall between 3% and 5%, according to the state Division of Consumer Protection. It’s unclear what government entities routinely charge, and how many on Long Island charge the 7%. But experts interviewed by Newsday called a fee that size alarming, raising questions about whether private companies are reaping profits on public services and why the government has allowed it.

“It's a complete add-on junk fee. I understand that there is a cost for credit card processing, but it doesn't mean that it has to be cost plus profit,” said Adam Rust, the director of financial services at the Consumer Federation of America, a nonprofit association of nearly 250 consumer groups. “It's unfortunate that an entity like a government would be a part of these policies.” 

Great Neck Estates administrator Kathleen Santelli confirmed the village negotiated a contract with nCourt several years ago with a 6.99% fee for online credit card transactions. She and other village officials stressed they do not profit from the fee and that there are other ways to pay to avoid it. For instance, paying cash in person comes with no additional cost, and nCourt charges the lower rate for using credit cards in person. 

“The village does not receive that money; that money is the service fee for nCourt,” Santelli said. 

Cedarhurst Mayor Benjamin Weinstock, who said he was made aware of the surcharge after Newsday reached out, also added: “Rest assured the village doesn’t see any of that fee. We get the net amount of the ticket.” He noted that people can avoid a surcharge by paying in person by cash.

Southampton Village Judge Linda Riley said nCourt might get replaced, though she declined to say why. “We're looking into phasing it out. I'm reviewing the contract,” Riley said. She also noted that people can pay in person by cash or check without the charge.

Still, advocates said that for some who are struggling financially and don't have bank accounts, paying online is more than a matter of convenience. They might not have time to travel to traffic courts, which often have limited hours. While the villages don't disclose the online credit card fee for traffic tickets on their websites, Eric Johnson, a spokesperson for nCourt, whose parent company is Catalis, confirmed it charges 6.99% plus the extra $1 directed to the New York State Court system.

He said the company's fee is necessary to cover costs, like a call center, website and financial reporting that could otherwise be borne by villages. He also said fraud risk is higher online than in person. The state Office of Court Administration did not return several calls and emails seeking comment.

“It could be a lower fee, but the court would then have to handle their own chargebacks and fraudulent transactions,” or pay extra for a call center and other costs, Johnson said. He declined to say which villages on Long Island nCourt has contracts with but said the company has thousands of clients nationwide.

The Suffolk County Village Officials Association did not respond to requests for comment. Ralph Kreitzman, executive director of the Nassau County Village Officials Association, was not aware of any issue and declined to comment.

Suffolk County also has a contract with nCourt but charges a lesser credit card online processing fee of 3.5% fee that it retains, according to county spokesman Michael Martino. Johnson, the nCourt spokesperson, said Suffolk “has its own, separate payment processing contract, and the large population and larger payment processing volume qualifies for lower fees.”

Nassau County spokesman Chris Boyle did not respond to numerous requests for comment about what the county charges for an online credit card fee.

Experts: 'murky' government fee rules

While the state has said it's strengthening protections for consumers, experts said it's unclear if government entities are subject to the same requirements as private businesses. A bill signed into law in February clarifies practices for businesses, requiring both cash and credit card prices be disclosed. It also limits fees passed along to consumers to the amount charged by the credit card company.

The Division of Consumer Protection also sent a letter to local governments outlining the new law, enforceability and civil penalties for noncompliance.

In most business transactions, parties will “charge what they can get away with” and consumers could take their business elsewhere, Rust said. 

“You don't have a choice” about paying a ticket, Rust said.

Norman Silber, consumer law professor at Hofstra University, called government credit card fees “very murky.”

“It's an area that is clearly confusing to consumers, and it's clearly ripe for opportunistic profit-taking by processors,” Silber said. “There needs to be probably more oversight.”

People who have to pay a traffic fine may feel there is little recourse, other than to pay.

And as online payments become a part of everyday life, drivers can feel like the hidden costs are an unfair burden.

“It has become such a fundamental and essential part of how all of us interact, from paying with our phones, or using electronic payment methods, like PayPal, Venmo or Zelle,” Sheehan said. “And here we're being penalized for it.”