There is no ethical barrier to passing on the merchant fee, or crediting the client for the net amount of the transaction only, if the client agrees. Therefore, the first step toward charging clients merchant fees would require updating your written fee agreement to include this cost. If you wish to modify existing agreements, remember that any modification in the lawyer’s favor “… requires client consent based on an explanation of the reason for the change and its effect on the client…. In addition, the modification must be objectively fair.” OSB Formal Opinion 2005-97.
The real obstacle in passing on merchant fees is a little something called the Truth in Lending Act. (TILA). As noted by the Oregon State Bar in OSB Legal Ethics Opinion No. 2005-172:
Passing the merchant fee on to the client or crediting the client for the net amount of the transaction only … may implicate Regulation Z of the Truth in Lending Act,
12 CFR §226. As a result, you may be compelled to offer cash discounts to all clients and make specified disclosures to your clients who pay by credit card.
See CONSUMER LAW IN OREGON ch 14 (Oregon CLE 1996 & Supp 2000).
The bottom line: unless you are willing to immerse yourself in the TILA and create compliant disclosures, don’t try to pass on merchant fees. The TILA is an extremely complex piece of legislation, as evidenced by this 61 page manual published by the FDIC (Federal Deposit Insurance Corporation). Furthermore, the best practice is to build the cost of taking credit cards into your fee – what you charge for your services. This is what the retail world does. When we pay by credit card, retail merchants don’t say: “That will be $159.00 for the lamp (or spa services) and another $4.77 for our merchant fee.” Clients do not like to be nickel and dimed to death. Just say no!
For a further discussion about credit cards, including answers to FAQ, see this post.
For tips on flexible and inexpensive credit card processors for lawyers, check this out.
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