Credit guru Thea Dudley has spent more than 30 years in LBM credit management. Now she's here to answer your credit and collection questions. Got a question for her mailbag? Contact Thea at

Dear Readers:
The question about credit card surcharges a few columns back created the biggest stir of any column I have ever written. I got phone calls, emails and even took part in a credit manager discussion group about it. One thing was certain: Everyone had a viewpoint, but no one had an absolute solution.

Some people wanted to vent their frustration, some wanted to debate the law—what was legal, what was not. Some sent solutions:

  • Get with sales to let them know who is paying with credit card and have sales adjust the customer’s pricing accordingly.
  • Offer a discount for customers paying with check or cash.
  • Stop taking credit cards altogether.

A couple companies have already implemented a surcharge. That led us down that rabbit hole for a while, into a debate about the laws in certain states. If you are nationwide, how do you handle this?

There are eight states with laws that declare you can't charge a surcharge on credit cards, but this doesn’t mean the law always is enforced scrupulously. I talked with a company that is in one of those states and still has implemented a fee. When I asked why, a company official told me: "The state tax assessor’s website charges a credit card fee when you pay on line, so if the state can violate its own laws, I figure so can I."

My local National Association of Credit Managers (NACM) group for building materials held a roundtable discussion and invited a local construction law attorney to address the legal side and facilitate the discussion. Here are the major takeaways:

  • Credit card agreements are individual. The agreement is with whatever bank or service you have an agreement with. So they are all different. They all appear to have smaller print than the Bible and are longer.
  • American Express is actually a bank, unlike the other credit card companies so it will be a different breed altogether.
  • State agencies can exempt themselves. They don't have to follow the rules that the legislature writes.
  • It doesn't matter what you call it—surcharge, convenience fee, it's all the same. The risk is the risk in states that don't allow the charge. It's a misdemeanor, but still risk.
  • You can offer a discount for certain types of payment, thereby making a credit card the less attractive option. (This led to a sidebar discussion on how to implement it on an invoice.)
  • To get around the states that don't allow a charge, could you use centralization as a defense? Debatable. It could be viewed the same as freight, so there’s no guarantee that the tactic would hold up.
  • After a solid hour-plus discussion, we ended up where we started. I felt like a dog chasing its tail. We just went in a circle with slightly more knowledge but no solutions.

What I got out of it is that this is an individual business decision based on your company's overall sales and credit policy. This debate will continue as credit cards are not going away.

Stay tuned.