Wyoming Supreme Court finds Auto Finance Company’s Charging a Fee for Optional Payment Methods it Offered to Customers Did Not Violate Wyoming Law Because Such Charges Were Not “Incident to the Extension of Credit”

In Vogel v. Onyx Acceptance Corp., — P.3d —-, 2011 WL 6316014 (Wyo. 2011), the Wyoming Supreme Court found in favor of an auto finance company and against Wyoming regulators.  The Regulators had claimed that “Onyx violated the WUCCC by charging customers a fee, that was not disclosed when credit was extended, for making payments by telephone or internet”.  The Supreme Court rejected the regulator’s argument, explaining in part:

Onyx maintains the district court correctly concluded the WUCCC does not prohibit it from charging a fee for optional payment methods it offers to its customers after credit had been extended.  ¶ Onyx was subject to the regulatory jurisdiction of the WUCCC, Wyo. Stat. Ann. §§ 40–14–101 through 702 (LexisNexis 2011), and the Administrator of the Code with respect to consumer credit sales contracts that it purchased from Wyoming automobile dealers. The contracts Onyx purchased were originally executed by automobile dealers and their customers who purchased automobiles on credit. When Onyx purchased the contracts, the dealers assigned them to Onyx and the customers then made the payments on their contracts directly to Onyx.   ¶ Onyx offered customers the option to make payments on their contracts by phone or internet. For customers choosing to make payments in one of those ways, Onyx charged a fee of $9.50 per phone payment and $5.00 per internet payment. The fees were not mentioned in the credit sales contracts nor were they otherwise disclosed to customers at the time the dealer extended credit. Customers who chose to pay Onyx by phone or internet incurred the fees after credit had been extended and after the automobile dealer had assigned the contract to Onyx. The customers had the option not to pay by phone or internet and not to incur the fee by making their payments by regular mail or another expedited method such as Federal Express or Western Union. . . ¶  . . .  Neither party asserts that the fees for payment by phone or internet were contracted for additional charges (§ 40–14–213), delinquency charges (§ 40–14–214), deferral charges (§ 40–14–215) or default charges (§ 40–14–248). The dispute centers on whether the fees are credit service charges within the meaning of § 40–14–209(a). If so, we are asked to decide whether they are prohibited by the WUCCC because they were not mentioned in the consumer credit sales contract or otherwise disclosed to the customer at the time credit was extended. If the fees are not credit service charges, we must decide whether they are prohibited by the Code because they do not fall within the definition of charges authorized by the statute. . . . ¶  Viewed in light of the purposes set forth in subsections (a) and (b)(ii) through (v), we are not convinced the fees for payment by phone or internet are “credit service charges” covered by the WUCCC. Even if the dealers had foreseen the fees at the time they extended credit to the customers, disclosure would not have made the credit transaction more understandable to the customer. Given that the fees were optional, we are not persuaded disclosure would have fostered competition among the dealers. Customers could simply choose not to make their payments by phone or internet. Likewise, the fees were not related to the cost of credit because credit had been made available to the customer before Onyx became involved and offered customers the optional payment methods. The fees simply were not terms of the transaction in which the dealers extended credit to customers. Finally, we are unable to see how an offer made by an assignee of the consumer credit contract after the consumer credit sale was completed allowing customers the option of paying by phone or internet for a fee would hinder the development of fair and economically sound consumer credit practices. Construed liberally to promote the purposes and policies of the WUCCC, we conclude the fees are not credit service charges within the meaning of § 40–14–209(a)(i) because they were not “imposed directly or indirectly by the seller as an incident to the extension of credit.”