18th of September 2010 Author: Glo Wood
Credit card fees are illegal, says lottery spokesperson
The row over New York Lottery credit card subscribers being charged fees by Mastercard heated up again this week, with a lottery spokesperson describing the imposition of fees by Mastercard as 'illegal'.
Spokesperson Jennifer Givner told Associated Press that since June 1, MasterCard users have been billed as if they were taking cash advances. She said that typically means banks charge $10 fees and immediate interest at rates up to 24.9 percent.
"State law says you can't charge more than the face value for a lottery ticket," Givner said.
MasterCard spokesman Chris Monteiro responded, claiming that the banks that issue MasterCards set the fees and rates, while his company receives only a fee for processing.
But Givner said Friday it was actually MasterCard that changed a code for lottery purchases, moving them into a category with bets on dog racing and horse racing. She said lottery purchases were previously treated like fees for such government services as renewing a driver's licence.
Givner said New York's Division of Lottery has discussed the fees with the state attorney general's office and is hoping federal representatives will also get involved.
A spokeswoman for Chase Card Services, confirmed that lottery ticket purchases in any state are treated as cash advances.
"We identify those transactions by the codes they are assigned by the payment networks," such as MasterCard, she said.
Givner said the NY lottery had stopped accepting Visa cards in June because Visa planned to assign a code that would lump state lottery purchases with illegal gambling in terms of the UIGEA.
"Clearly the New York lottery is a legal gaming state lottery," Givner said. "All state lotteries are legal. Visa said customers would be subject to higher fees and interest rates as a result. We said, 'Thank you but no thank you.' We no longer accept Visa."
Using the example of a $104 one-year Lotto subscription, Givner said, "Chase is saying, 'Here's your charge for $104. We're going to also slap you with a $10 cash advance payment fee ... and then they're saying from the date of the transaction, we're going to begin charging you interest. They don't wait for the billing period to conclude."
The lottery posted a warning to customers on its website and Givner suggested players avoid the fees by mailing in a check. She said the lottery is hoping to soon accept its own form of electronic payment.
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