Judge Approves $2.8M Settlement in FDCPA Convenience Fee Class Action

A District Court judge in Florida has granted preliminary approval of a $2.8 million settlement in a Fair Debt Collection Practices Act class-action case involving convenience fees charged when consumers made payments on their mortgages over the phone or online.

A copy of the preliminary approval in the case of Morris v. PHH Mortgage can be accessed by clicking here.

This case has been working its way through the legal system for some time. Originally, the case was filed against two mortgage servicers and a proposed settlement of nearly $13 million, but the judge expressed reservations that the deal was bad for consumers, leading to an amended complaint and subsequent proposed settlement. As well, a group of nearly three dozen state attorneys general sought to block the original settlement, saying it was reached too hastily and too heavily favored the defendants.

Under the terms of the new settlement, members of the class who do not opt out of the settlement will receive a share of the $2.8 million while also reducing the fees class members will have to pay when making payments online or via the telephone for the next two years.

The company has also agreed to add additional disclosures to its website to increase borrower awareness of alternative payment methods that could have lower fees or no fees whatsoever. The defendant has also agreed to provide additional training to its representatives to provide additional information and disclosures about convenience fees when speaking with customers.

The plaintiffs filed suit, accusing the defendant of violating the FDCPA by charging convenience fees and then not remitting the amount of the entire fee to the payment processor, instead retaining a “considerable” portion of the fee.

A fairness hearing has been scheduled for May 31 to make a final determination of the proposed settlement.

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