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Fees often added to customers’ payments

Verizon plan was far from unique

By Todd Wallack
Globe Staff / January 5, 2012
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After just a day of heated complaints by angry consumers on social networking sites, Verizon Wireless last week shelved plans to charge customers a $2 fee to pay their bills with credit or debit cards. Despite the outrage over Verizon’s “convenience fees,’’ similar charges are almost everywhere.

Such fees are routinely imposed by telecommunications providers, electric utilities, lenders, schools, and government agencies on consumers who pay bills with plastic or get help from customer service employees.

RCN, a cable television company that serves the Boston area, charges $1 to make a payment through its website, $4.50 to use its automated phone system, and $6.95 to make a payment through a customer service representative on the phone. NStar, one of the state’s largest utilities, charges customers a $4.95 “convenience fee’’ to pay via credit card or debit card and $1 to make a payment in person at certain stores or outlets.

HarborOne Credit Union in Brockton recently started docking borrowers $9.95 to make a loan payment with a credit or debit card.

“It’s unfortunate that only a few of the fees have been targeted’’ by critics, said Jeff Kagan, an independent telecommunications analyst in Atlanta. The fees, he said, should all be made to “go away.’’

Analysts say companies are rolling out the fees to boost profits and steer customers away from costly services. Many companies have to pay processing fees (usually around 2 percent) when they accept a credit card, for instance. And it costs money to hire additional employees to assist customers.

But the boom in social networking sites, such as Facebook and Twitter, is making it easy for customers to band together to fight fees they particularly dislike.

Before Verizon, for instance, Bank of America Corp. scuttled plans to charge a $5 monthly debit card fee after more than 300,000 people signed a petition on to protest the fee, and many customers threatened to close their accounts.

Consumer advocates and analysts said Bank of America and Verizon Wireless caught attention while similar fees from other companies go unnoticed because both are dominant players in their industries and receive close attention from the media. In addition, the fees came at a time when many people already felt stretched by the weak economy.

“The bottom line is people need to feel the fee is fair and they are getting something for it,’’ said Barbara Anthony, the state’s undersecretary for consumer affairs and business regulation.

Countless other payment fees remain.

AT&T Wireless charges $5 to make a payment in person with a clerk or via phone with a live agent. And T-Mobile USA: $5 by phone with an agent.

Many cable TV providers levy similar fees. Comcast Corp., the region’s largest cable television provider, charges $5.99 to make a payment via phone with the aid of a representative. And the two largest satellite TV providers, DirecTV and Dish Network, both charge $5 to make a payment through a representative. RCN, which charges as much as $7 for some types of payments, could not be reached for comment.

National Grid, one of the state’s major energy utilities, charges $2.25 for residential customers to make a payment of up to $600 with a credit or debit card. (Customers who owe more would have to enter multiple transactions and pay multiple fees.) Both National Grid and NStar said the fees are collected by an outside vendor, Western Union, and none of the money goes to the utilities.

Many lenders also charge extra when people make installment payments via credit card. HarborOne, for instance, says it has to recover the cost of processing the payments.

“This is a service we offer customers to pay at the last minute on their credit card so they don’t become late on their loan,’’ said James Rice, a senior vice president with the credit union.

Even nonprofits and government agencies sometimes charge extra when customers make credit card or online payments.

The city of Lowell, for instance, charges 25 cents to pay parking tickets, water bills, and property taxes by transferring money electronically from checking or savings accounts. Lowell also charges a variable fee of at least $1 to use credit cards. For instance, customers would pay $2.25 extra to pay a $50 ticket. A $2,000 property tax bill would cost $60.55 extra, or about 3 percent. The city attributes the fee to a vendor, Metropolitan Communications LLC, which handles payments for other cities and towns in seven states.

Many colleges, including Wellesley College and Brandeis University, also partner with a company called Tuition Management Systems, which charges students an extra 2.99 percent to process tuition payments made by credit card. That adds $299 to a $10,000 tuition payment.

The company, a unit of First Marblehead Corp. of Boston, also charges students $10 if they use a representative’s help to make a payment via telephone. Scott Juedes, director of student financial services at Wellesley, said some families want the option of paying via credit card.

But he said the college also offers many ways to pay the bill free of charge, such as by cash or check. “It’s just part of the suite of options we offer,’’ Juedes said.

Other organizations said they, too, offer many payment methods that avoid surcharges.

But Anthony, the state’s consumer affairs chief, said some companies could do a better job of alerting customers about potential surcharges and letting them know about alternatives to avoid the fees.

“This is an issue of fairness,’’ Anthony said. “It should be disclosed clearly and conspicuously on the bill.’’

Todd Wallack can be reached at Follow him on Twitter @twallack.

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