Debt Collectors Cannot Charge “Pay-to-Pay” Fees

Debt collectors often attempt to charge extra fees when collecting debts from consumers, particularly when the consumer seeks to make a payment online or to make payments in other specific ways that the company says will incur a fee. According to a recent news release from the Consumer Financial Protection Bureau (CFPB), the CFPB has “issued an advisory opinion affirming that federal law often prohibits debt collectors from charging ‘pay-to-pay’ fees,” which are often known as “convenience fees.” As the CFPB clarified, these pay-to-pay fees, or convenience fees, “are imposed on consumers who want to make a payment in a particular way, such as online or by phone.” The advisory opinion is part of a longer focus by the CFPB to address “junk fees” that affect consumers.

What do you need to know about the CFPB’s advisory opinion and any effects it could have?

Details of the Advisory Opinion

According to the news release, the CFPB’s recent advisory opinion is based on language in the Fair Debt Collection Practices Act (FDCPA). Under Section 808, which defines unfair practices by debt collectors, it is a violation of federal law for a debt collector to collect an amount of money from a debtor, which includes “any interest, fee, charge, or expense incidental to the principal obligation . . . unless such amount is expressly authorized by the agreement creating the debt or permitted by law.”

The advisory opinion looks to this section of the FDCPA and clarifies a number of key points for debt collectors, including the following:
  • Debt collectors cannot collect a fee unless that fee is allowed by the terms of the contract with the debtor;
  • Even when a law does not expressly allow a debt collector to collect a fee, the debt collector is not permitted to collect a fee unless it is in the contract since silence on the affirmative ability to collect a fee does not mean that it is lawful to collect the fee; and
  • Using a payment processor that charges a fee is also unlawful if the debt collector receives any kind of kickback from the payment processor.
Unlawful Fees are Bad for Consumers and Debt Collectors Alike

The CFPB emphasizes that pay-to-pay fees are harmful to both consumers and debt collectors alike. While the harms to consumers are obvious, these types of fees charged unlawfully by certain debt collectors does a disservice to debt collectors that are abiding by the law and complying with the FDCPA.

As the news release explains, “the CFPB wants to ensure that law-abiding debt collectors are not disadvantaged by their competitors that impose unlawful fees.”

Seek Advice From a Consumer Protection Attorney in Oak Park

If you are struggling with debt, you should seek advice from an Oak Park consumer protection lawyer about your rights under the FDCPA, and about options for getting back on track with your finances, such as a Chapter 7 or Chapter 13 bankruptcy filing. We can speak with you today about your circumstances and provide you with advice that can help. Contact the Emerson Law Firm today for more information.


See Related Blog Posts:

What is the Bankruptcy Threshold Adjustment and Technical Corrections Act?

What You Should Know About Credit Card Debt and Bankruptcy

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