On June 16, 2016, Ken Paxton, the Attorney General of Texas, issued an opinion (Opinion No. KP-0095) addressing whether a Real Property Owner (“Owner”) may impose a fee or charge on a tenant who uses an online payment option to pay rent and ancillary charges to the Landlord through a third-party vendor. Specifically, the Attorney General addressed whether this fee or charge for paying online would constitute a prohibited surcharge on the use of credit or debit cards in violation of Section 339.001 of the Finance Code and section 604A.002 of the Business and Commerce Code.
The short answer: Yes, online rent payments may be subject to fees or charges, so long as the fee or charge is uniformly charged to all online payments by an arms-length third-party payment processor.
To ensure compliance, the Attorney General cautioned that owners must take care to ensure that the online payment system is truly a third-party, arms-length transaction. If the arrangement is truly an arms-length transaction, then the Owner would not be imposing an additional fee and would not violate the statutes. In this case, the third-party processor is charging the fee, not the Owner; therefore, there would likely be no violation of Section 339.001 of the Finance Code or section 604A.002 of the Business and Commerce Code.
If there is a question of whether the Owner is truly separate and autonomous from the third-party processor charging the fee, then, depending on the facts, the Owner and third-party processor may be determined to be one of the same. In this case, the Owner may be in violation of Section 339.001 of the Finance Code and section 604A.002 of the Business and Commerce Code.
This opinion is in accord with the Advisory Bulletin issued by The Texas Office of Consumer Credit Commissioner in June 2015, Bulletin B15-2.
This Advisory Bulletin recommends the following to ensure compliance with relevant laws:
- If the Owner contracts with a third-party payment processor to accept payments by credit card, the Owner should not contract to receive any portion of the fee charged by the processor, either directly or indirectly;
- Ensure that the relationship between the Owner and the third-party processor is an arms-length relationship that is limited to processing payments. Otherwise, the tenant could claim that the Owner and third-party processor have a general agency or joint venture relationship; and
- Provide the Tenant with multiples means of payment, so that the Tenant is not required to pay the third-party processor’s fee. If an Owner requires the Tenant to make payments through the third-party processor, without any other option, and there is a fee associated with that form of payment, then there is an argument that the Owner is imposing a credit card surcharge.