Your Business Credit

What are my rights regarding convenience fees for utilities?


A homeowners association can charge a convenience fee for dues including utility charges because of a loophole in California law

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Dear Your Business Credit,

I read the story about credit card convenience fees in California. My condo’s homeowners association (HOA) contracts with PayLease to collect HOA dues, which include each unit’s PG&E utility charge for electricity. If the owner prefers to pay by credit card, PayLease charges a $28+ convenience fee per month, for monthly HOA dues of $540.67, which is over 5 percent(!)

Per the info I just read on your site, this appears to be greater than Visa’s convenience fee allowance in California, which is 4 percent. Also, it seems PayLease’s convenience fee is sliding, based on the unit’s HOA dues versus a fixed fee. If I read correctly on your site, a convenience fee should be a flat rate. Have I interpreted the information correctly? Or perhaps we are still awaiting the impending Supreme Court decision about credit card convenience fees? – Sharon

Dear Sharon,

Ouch. It’s hard not to notice a $28 convenience fee!

I ran your question past Jen Lee, an attorney with offices in San Ramon and Tracy, California, who frequently advises clients on debt-related matters and is a co-author of “Preventing Credit Card Fraud: A Complete Guide for Everyone from Merchants to Consumers.”

You may not welcome this news, but apparently, PayLease has the right to charge you and your fellow condo owners the $28 convenience fee.

Check out all the answers from our credit card experts.

Ask Elaine a question.

Companies exempt from caps on convenience fees

“There is an interesting loophole in the law for utilities and public agencies,” Lee noted in an email. “CCP 1748.1, which is part of the statute regarding credit card transactions, Section 1748.1(f), specifically excludes charges for payments to an electrical, gas or water corporation and approved by the Public Utilities Commission.”

Code section, 1748.1 explains: “This section does not apply to charges for payment by credit card or debit card that are made by an electrical, gas or water corporation and approved by the Public Utilities Commission pursuant to Section 755 of the Public Utilities Code.”

So what does this have to do with PayLease?

“If the HOA has a payment service that includes utility payments, then they fit into the loophole and can charge a convenience fee for paying the bill with a credit or debit card,” Lee explained. “When I checked out PayLease’s website, it looks like they offer services to manage HOA, rent, utility bills all on one statement and for one payment, which then allows for the convenience fee for utility payments.”

It is this exemption that allows them to charge the $28 fee for providing the customers with the option of paying the bill by credit card or debit card. As to how high the fee can be, Lee explained, “Under PUC Section 755, the fees have to be approved by the commission for reasonableness.”

It sounds like you have a strong objection to the convenience fee so this may be something worth bringing up at your next condo association meeting. My guess is there are other owners who would enjoy the convenience of paying by credit card without the $28 fee.

Alternatives to paying with a card

In the meantime, if the convenience fee seems burdensome, it might be better to write an old-fashioned check. Many people are switching to electronic payments for their purchases, but writing a check can save you money in cases like this. If you want to do it online, your bank will also likely allow you to send a check through your banking app, which won’t feel much different from charging it to your card.

See related: How to avoid paying convenience fees on utility bills, Why utilities charge convenience fees to pay by credit card

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