CFPB Says Collection Agents Cannot Charge Convenience Fees | PC Weiner Brodsky Kider

On June 29, 2022, the CFPB issued a advisory opinion concluding that the FDCPA prohibits debt collectors from charging convenience fees, or “pay-to-pay” fees, unless the fee is expressly authorized by the original loan or under applicable law. These convenience fees include additional fees incurred by consumers when making payments in a particular way, such as online or over the phone, even if that payment method has been chosen by the consumer.

Section 808(1) of the FDCPA prohibits debt collectors from collecting “any amount (including interest, fees, charges, or expenses incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the indebtedness or authorized by law.” The CFPB interprets Section 808(1) to encompass convenience charges because they fall within the scope of “any amount” and therefore concludes that provision no. ‘permits the collection of convenience charges only where “(1) the agreement creating the debt expressly authorizes the charge and some law does not prohibit it; or (2) a law expressly authorizes the charge, even if the agreement creating debt is silent.” In other words, the CFPB explains that charges that are not expressly prohibited may still not be permitted by law if they are not expressly permitted by applicable law. advisory opinion court rulings that ruled that e State contract law allows debt collectors to collect payment fees if such amounts are subject to a separate agreement. If the charges are not expressly authorized by law, the CFPB’s position is that they must be expressly authorized by the “agreement creating the debt”.

The advisory also says debt collectors will be held liable for violating section 808(1) of the FDCPA when they use payment processors that charge payment fees to pay as part of payments for agents. recovery.

The accompanying CFPB press release is available here.