On June 29, 2022, the CFPB issued an advisory opinion concluding that the FDCPA prohibits debt collectors from imposing convenience fees, or “pay to pay” fees, unless the fee is expressly authorized by the original loan or under applicable law. Such convenience fees include additional charges incurred by consumers when making payments in a particular way, such as online or by phone, even if such payment method was chosen by the consumer.
Section 808(1) of the FDCPA prohibits debt collectors from collecting “any amount (including 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 CFPB interprets Section 808(1) to encompass convenience fees because they fall within the scope of “any amount,” and therefore concludes that the provision only permits collection of convenience fees when “(1) the agreement creating the debt expressly permits the charge and some law does not prohibit it; or (2) some law expressly permits the charge, even if the agreement creating the debt is silent.” In other words, the CFPB explains that fees that are not expressly prohibited may still not be permitted by law if they are not expressly authorized by applicable law. Furthermore, the advisory opinion court decisions which have held that state contract law allows debt collectors to collect pay-to-pay fees if such amounts are the subject of a separate agreement. If the fees are not expressly permitted by law, the CFPB’s position is that they must be expressly permitted by the “agreement creating the debt.”
The advisory opinion also states that debt collectors will be liable for violating FDCPA Section 808(1) when they use payment processors who charge pay-to-pay fees in connection with payments for the debt collectors.
The CFPB’s accompanying press release can be found here.