The Consumer Financial Protection Bureau (CFPB) recently issued a new edition of its Supervisory Highlights that included a section on debt collectors’ collection of pay-to-pay fees. The CFPB has affirmed that federal law often prohibits debt collectors from charging “pay-to-pay” fees, which are commonly described by debt collectors as “convenience fees.”
A copy of the report can be accessed by clicking here.
These fees are imposed on consumers who want to make a payment in a particular way, such as online or by phone. The CFPB’s advisory opinion provides guidance on how debt collectors can comply with federal law when collecting debts and avoid charging these fees.
In addition to the advisory opinion on pay-to-pay fees, the CFPB has also conducted examination work to evaluate how financial institutions handled pandemic relief benefits deposited into consumer accounts. Specifically, the CFPB performed a broad assessment centered on whether consumers may have lost access to pandemic relief benefits, namely Economic Impact Payments and unemployment insurance benefits, as a result of financial institutions’ garnishment or setoff practices.
Finally, the CFPB has launched an initiative to scrutinize junk fees charged by banks and financial companies. Junk fees are typically not subjected to the normal forces of competition, leading to excessive costs for services that a consumer may not even want. Certain banks and financial companies might hide these unavoidable or surprise charges or disclose them only at a later stage in the consumer’s purchasing process, if at all. Among the items noted by the CFPB in the report were:
- Fake paper statements: Some institutions charge customers monthly fees for sending paper bank statements. CFPB examiners found instances where banks charged fees for statements they never actually printed or mailed.
- Worthless add-on products for paid-off auto loans: When people purchase cars, they sometimes have purchase loan add-on products, like guaranteed asset protection (GAP) insurance. In situations when borrowers paid off their loan early or had their vehicle repossessed, CFPB examiners found that loan servicers continued to charge fees for the add-on products, which no longer offered any value.
- Sloppy international money transfers: CFPB examiners found remittance providers charged hidden fees by taking money out of the funds consumers sent without properly disclosing them. In other instances, CFPB examiners found remittance providers failed to refund fees when the money consumers sent failed to arrive on time.
“The CFPB continues to uncover junk fee scams that violate the law and undermine consumer trust,” said CFPB Director Rohit Chopra, in a statemnt. “We will continue to combat the illegal fees cropping up in consumer finance markets.”