Collection Agency's Ability To Change Non-Sufficient Funds(NSF) Processing Fees - Q3 2000

By the Division of Banks

Mass.Gen. Law chapter 93 section 24 and its implementing regulation set forth in 209 CMR 18.00 addresses a collection agency's ability to charge a processing fee. The regulation at 209 CMR 18.18(9) states that it shall be an unfair and deceptive act or practice for a collection agency to collect or attempt to collect any amount, including any interest, fee, charge or other expense incidental to the principal obligation, unless such an amount is expressly authorized by the agreement authorizing the debt and the collection agency is expressly authorized, in writing to collect or attempt to collect any such amount by the creditor. Therefore it is the position of the Division that the processing fee may not be charged by a collection agency unless such a fee has been expressly authorized in writing to collect such fee. The language would also appear to preclude other charges such as non-sufficient fund fees by a collection agency unless expressly authorized by the agreement.