Many municipalities allow residents to pay their property taxes online.
But at least two New Jersey municipalities aren’t disclosing the fees that are charged to certain online taxpayers.
The lack of disclosure is a big problem.
Josh Needle of Fanwood said he tried to make an online payment on Aug. 1, the date his property taxes were due.
The system gave the option of paying by credit card or by e-check. He chose the e-check.
Needle said a pop-up message warned there was a $1.05 convenience fee.
No problem, he thought.
He made the payment and received an email confirmation. “This e-mail will serve as confirmation that your payment was receieved,” it said, and yes, the misspelling was in the email.
But on Aug. 12, Needle received a letter from Fanwood tax collector Colleen Huehn.
The letter said his payment was rejected, interest would accrue and that Needle should contact the office for the “correct amount which will include a return check fee.”
Needle said he was surprised the payment was rejected because he had more than enough in his checking account to cover the bill.
He visited the tax collector’s office to pay the bill and ask why the payment was returned.
“[Tax collector Huehn] said she doesn’t know why, she just gets an email stating it’s been rejected along with a $20 charge, which the town then passes along to me,” Needle said.
Needle said he asked for the vendor’s contact information so he could learn more, but Huehn said she didn’t have that information.
“I also asked how come I received a payment confirmation email?” Needle said. “She said they don’t process it until a few days later.”
Needle said he paid the $20 so his account would be in good standing, but he wasn’t done.
THE TWO BIG PROBLEMS
Needle saw two problems.
First, he said, the vendor used by Fanwood doesn’t validate account information in real time. Needle said he worked as a software developer and he would probably get fired for not having validations for a monetary transaction.
And second, he said, the vendor sends out a confirmation email that’s “essentially useless. They might as well send out an email that I’ve won the lottery. It’s just as truthful,” he said.
Needle said his wife later spoke to Huehn, who said she spoke to the vendor. It said the payment was rejected because the account numbers were transposed.
That made Needle more frustrated. Had the vendor validated account information at the time of payment, this could have been avoided, he said.
If you make a purchase at Amazon, Needle said, and you enter in the wrong payment information, Amazon doesn’t say “Aha! That’ll be $20.” Instead, Amazon asks you to reenter the payment information.
“In this age of electronic transmissions, when no human is involved, why should the ‘return check fee’ cost $20?” he said. “I already paid $1.05 for the e-check. If it fails, there’s no extra work on anyone’s part.”
Needle said Fanwood’s system should work the same way.
“Why doesn’t Amazon charge $20 if you enter in the wrong account info? Because you’d take your business somewhere else,” Needle said.
But unless you want to pay by mail or in person, taxpayers don’t have a choice.
Indeed, if there’s a payment problem with Amazon, the retailer will email a customer so there’s an opportunity to pay in a different way.
Needle said he’s worried for older residents in town.
“I know it’s not unheard of for older people who aren’t as comfortable with computers and keyboards to make mistakes more often,” Needle said. “Heck, I made one.”
Needle wondered how much extra money the vendor makes because of the unposted $20 fee, and whether it was a violation of law.
He asked Bamboozled to investigate.
NOT THE VENDOR BUT THE TOWN
Fanwood’s online payment technology is provided by two companies: software provider Edmunds & Assoc. of Northfield, which uses payment services from Link2Gov.com, a division of FIS, a Florida-based financial services technology provider.
An Open Public Records Act (OPRA) request showed Fanwood paid $11,290 to Edmunds for the services, and several thousand dollars more for services such as tax bill stuffing and mailing.
Neither company would tell us how many municipalities in the state they provide services for, or who was charging the $20 fee.
Online searches showed local governments use different software providers for online tax collection, and quite a few also use Edmunds.
Nutley is one of them, but the township’s online payment page clearly says a $20 fee will be assessed if an e-check is returned for any reason.
That’s when we realized it’s Fanwood, not Edmunds, that charges the $20 fee.
Fanwood tax collector Huehn confirmed it’s Fanwood, and the fee is charged for all returned payments per borough ordinance, she said.
It’s a returned check fee charged by Fanwood’s bank, which the municipality passes on to the taxpayer, she said.
We also learned that two Fanwood online tax payments were rejected in 2015, and one was rejected in 2016.
We asked why the fee isn’t posted, but Huehn never answered the question.
So we asked about the confirmation email received by Needle.
“When the transaction is complete, the online payer will receive a ‘payment confirmation’ email/not a ‘payment accepted’ email and then will be directed to a screen that specifically notes in RED letters ‘****Payment Pending****,'” she said in an email. “These payments are then routed to a clearing house where verification of account information will begin.”
Even if the online screen says a payment is pending, the email sent to taxpayers is worded such that a reasonable person might think the payment was complete.
As a reminder, the letter said, “This e-mail will serve as confirmation that your payment was receieved.” (And again, the misspelling isn’t ours.)
When we said that Nutley discloses the fee, Huehn said she checked out other towns that use the same system, and not everyone provides disclosure. She named Clark as one that does not disclose.
But just because other municipalities don’t do it, well, that doesn’t make it right.
And we figured the lack of disclosure was probably against the law.
Not exactly, said Tom Calcagni, a former head of the New Jersey Division of Consumer Affairs, now an attorney with Calcagni & Kanefsky in Newark.
Calcagni said the state’s Consumer Fraud Act imposes liability on “any person” who uses any unconscionable commercial practice, which includes “the concealment, suppression, or omission of any material fact.”
He said while courts routinely have found that hidden surcharges and fees violate the act, it doesn’t cover municipalities, which are not considered a “person” under the statute.
He called Fanwood’s lack of disclosure “troubling.”
“Even if the town was acting in good faith with no intention of misleading online property tax payers, knowing of its own failure to disclose the fee could suggest concealment and intentional omission,” Calcagni said. “At the very least, it would seem to suggest a failure to act in the best interest of residents.”
Hidden or undisclosed fees are not something the law tolerates from business owners, Calcagni said, adding that this situation raises the question of whether similar practices should be permitted by our local governments.
We took this to Clark, which also doesn’t disclose the fee. Tax collector Laura Caliguire said the township had no complaints about the fee, and that a resolution allowing the fee is passed each year.
She also said she wasn’t sure what Clark’s website said or didn’t say. We told her it didn’t make the disclosure, and we asked her to let us know if the township makes any changes. We haven’t heard anything yet.
We went back to Fanwood to ask if it would consider posting a disclosure, but it didn’t respond to multiple requests.
Heck, dear readers, we’ve got 565 municipalities in the state. Bamboozled didn’t check them all. Can you help out? Visit your town’s online tax payment system and let us know what you learn.
In the meantime, Needle wants to see Fanwood use a system with real-time verification.
“My point about the fee is that even ‘for any reason’ it isn’t really valid: the reason could be a blip in the electronic transmission — how many times have you had to re-swipe your credit card? — or in my case it was something that should never have been an issue in the first place with proper validation,” Needle said.
Have you been Bamboozled? Reach Karin Price Mueller at Bamboozled@NJAdvanceMedia.com. Follow her on Twitter @KPMueller. Find Bamboozled on Facebook. Mueller is also the founder of NJMoneyHelp.com. Stay informed and sign up for NJMoneyHelp.com’s weekly e-newsletter.