Can credit cards charge fees for mailing bills?

Alita Ditkowsky, 61, of Commack, bristled when credit card companies told her she would be billed for getting monthly bills in the mail.

She said credit card companies already charged retailers and consumers for their services, and the fee struck her as a tax on disabled people, older adults and those with limited access to the internet.

Then she learned about a state law that appeared to offer her vindication and prohibit the practice. But Ditkowsky discovered the measure wasn’t quite what it was billed to be.

"Even though there’s this state law, it’s basically worthless," said Ditkowsky, whose consumer advocacy work against a TV manufacturer took her to the White House in 2005. "We need to do something to change this because the banks are opportunists, and they’re taking advantage of customers."

The American Financial Services Association, a trade group for consumer credit providers, didn't respond to a request for comment. 

Ditkowsky started looking at section 399-ZZZ of New York State's General Business Law when two retailer-branded credit card issuers said they would soon charge about $2 to $3 for mailing paper billing statements. This would have cost her nearly $35 a month because Ditkowsky has a number of store cards. (Typically, these cards offer perks at a specific retailer as a reward for spending on the card.)

She flagged 399-ZZZ for federal and state regulators, and urged them to issue fines for violations, as the section permits. But Ditkowsky said her efforts didn’t seem to go anywhere.

Her husband wound up switching the cards to online payment methods since Ditkowsky's disability makes it challenging for her to get to and use the computer, Ditkowsky said.

"They’re [credit card companies] making money off the retailers; the retailers are passing that on to the customer; and then in addition to that, we’re being forced to pay a fee to get a bill," she said. "Imagine if everybody was allowed to charge you a fee to send you a bill: doctors, lawyers."

Ditkowsky was right to sense that 399-ZZZ wasn’t going to get her far, said Donald Maurice, a partner at Maurice Wutscher LLP who represents financial services clients. He said the legislation was so poorly written that it likely had no real application.

Maurice, chair of the New York City Bar Association's Consumer Affairs Committee, answered Newsday's questions about the limitations of the law and consumers' rights. His responses — shared below — have been edited for brevity and clarity.

Does the section bar businesses from charging a fee for sending paper bills?

That could be the takeaway if you just read the first sentence.

The section opens with: "Subject to federal law and regulation, no person, partnership, corporation, association or other business entity shall charge a consumer an additional rate or fee or a differential in the rate or fee associated with payment on an account when the consumer chooses to pay by United States mail or receive a paper billing statement."

However, when you interpret a statute, you have to read the entirety of it, and think about what is meant by each of the words and the phrases it contains. So you have to read the second line, which allows companies to incentivize going paperless.

It reads: "This subdivision shall not be construed to prohibit a person, partnership, corporation, association or other business entity from offering consumers a credit or other incentive to elect a specific payment or billing option."

Is this a matter of debate?

No, to read it any other way would really not give consideration to that last sentence.

In Santoro v. State Farm in the U.S. Southern District of New York Court, the insurer was charging a $3 fee to get bills in the mail. People handling everything electronically could reduce it to a $1 fee.

Under the law, the insurer was within its rights to charge less for electronic bills and to incentivize customers to go paperless, according to the court. It also looked at legislative history.

What does the legislative history have to do with it?

The legislative history can show the intent behind measures.

In this case, the sponsor of the law wrote a memo stating that the measure considers that businesses can save money and protect the environment by moving people to a paperless system. The legislation calls for the transition to be made with incentive-based tactics, rather than a broad fee. 

If it costs more to use paper, that’s OK because that’s what the purpose of the bill is: to actually incentivize electronic payments and electronic account statements.

So the law doesn't require businesses to find another way to incentivize going paperless like offering a credit or discount to those who do?

Even if you interpret it that way, the law runs into freedom of speech issues.

This came up in Manship v. TD Bank in the U.S. Northern District of New York Court. How bills and statements are described is considered commercial speech. There has to be a compelling state interest to restrict speech, and this didn't meet it. Other concerns were raised as well. 

Can people do anything about the fees?

People can complain to the state attorney general or the federal Consumer Financial Protection Bureau if they think a firm is engaging in a practice of charging unreasonable or exorbitant fees.

Regulators may take action if they see the fees as abusive or significant enough to shock the conscious. 

What about people with disabilities who say this is hard on them? 

The Americans with Disabilities Act requires businesses to take reasonable steps to make sure they are as accessible to people with disabilities as they are to those without disabilities. The obligation applies to companies' physical locations and their digital presence.

People with disabilities should share their concerns with companies — and document the exchange. Under the law, businesses typically get to choose what strategies they use to accommodate people with disabilities. But people who aren't adequately accommodated have the ability to bring a lawsuit.

By Sarina Trangle

sarina.trangle@newsday.comSarinaTrangle

Sarina Trangle covers affordability and cost of living issues and other business topics. She previously worked as an editor and reporter at amNewYork.