Can debt collectors add surcharges (interest, fees, charges or expenses) to the original debt?

Published: Thursday, August 31, 2006

Section 808 of the Fair Debt Collection Practices Act (FDCPA) states the collection of any amount incidental to the original debt is only permissible when the amount is expressly authorized by the agreement creating the debt or if the collection of the amount is permitted by law. This applies to the collection of interest, service charges, collection charges, late fees, bad check handling charges, and any other incidental charges. Collecting a fee that is not authorized by the agreement creating the debt or is not permitted by the law is an unfair or unconscionable act under the FDCPA.

Any additional charges that are included in the agreement underlying the obligation may not be charges that are prohibited by state law. The collector does not need to have a written contract in order to have an agreement with the consumer regarding the collection of additional fees. For example, the collection of a service fee for a dishonored check is permissible based on a sign posted at the point of sale if the collector can show the consumer knew of the charge. If the underlying contract is silent as to the collection of additional charges, state law must expressly permit the collection of such charges.

Also note that, if a debt collector offers to accept payments via electronic methods or by credit card, it would not be considered an FDCPA violation if those fees are voluntarily chosen by the consumer as a payment option, and the fees are charged by the independent entity processing the fee.