Debt collectors advised against charging convenience fees on payments

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CFPB cebt collection advisory opinion overview: 

• Who: The Consumer Financial Protection Bureau (CFPB) released an advisory opinion affirming that pay-to-pay fees charged by debt collectors are a violation of the Fair Debt Collection Practices Act. 
• Why: The CFPB issued the advisory opinion to affirm that it is unlawful for debt collectors to charge what is known as a “convenience” fee to debtors making a payment under certain circumstances. 
• Where: The CFPB’s advisory opinion applies to consumers nationwide. 

The Consumer Financial Protection Bureau (CFPB) released an advisory opinion affirming a provision that prohibits, under certain circumstances, creditors from collecting pay-to-pay fees, often referred to as “convenience” fees. 

The CFPB affirmed that the collection of the so-called convenience fees constitutes a violation of the Fair Debt Collection Practices Act if the fees are “not expressly authorized by the agreement creating the debt or expressly authorized by law.” 

“Debt collectors play a critical role in the consumer finance ecosystem, and the CFPB wants to ensure that law-abiding debt collectors are not disadvantaged by their competitors that impose unlawful fees,” the CFPB says in a statement. 

Debt collectors who charge a convenience fee if a payment is made over the phone or online — even though these methods of payment are faster and less expensive than if done in person or by mail — are in violation of the FDCPA, according to the agency.

Payments made by mail or done in person, meanwhile, typically will not have a charge for a convenience fee, the CFPB says. 

‘Pay-to-pay’ fees charged through third party may also be unlawful, agency says

The agency also clarified in its advisory opinion that a debt collector may also violate the FDCPA if they charge a pay-to-pay fee through a “third-party payment processor.” 

“Federal law generally forbids debt collectors from imposing extra fees not authorized by the original loan,” says CFPB Director Rohit Chopra in a statement. “Today’s advisory opinion shows that these fees are often illegal and provides a roadmap on the fees that a debt collector can lawfully collect.” 

Debt collectors can also harm consumers by placing a debt collection call to a wrong number.

A debt collector may accidentally call the wrong number for a variety of reasons, such as recording the wrong number, mixing the debtor up with someone else with the same name or calling a debtor’s relatives or people presumed to be relatives.

Have you been charged a pay-to-pay fee on a payment to a creditor made online or over the phone? Let us know in the comments!

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