Debt Collectors' Pay-to-Pay Fees Scrutizined

Debt Collectors' Pay-to-Pay Fees Scrutizined

The Consumer Financial Protection Bureau (CFPB) has been casting a wary eye on all kinds of add-on fees lately. The latest are the “pay-to-pay” fees often charged by debt collectors.

The debt collectors like to call them “convenience fees” but the CFPB calls them “junk fees.” Whatever you call them, they’re an additional charge levied on consumers who make a payment online or by phone.

“Federal law generally forbids debt collectors from imposing extra fees not authorized by the original loan,” said CFPB Director Rohit Chopra. “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.”

The CFPB has also been looking at credit card penalties, fees charged to military families and so-called employer-driven debt, among others.

Fees not justified by costs

The agency said it’s not trying to hamper legitimate debt collectors’ operations, and noted that most debt collectors allow consumers to make payments by phone or online without charging additional fees.

The bureau is looking instead at debt collectors who impose additional fees for certain types of payments, even if it is cheaper and easier to process those payments than ones delivered by paper check or in person.

These types of fees are often illegal, and today’s advisory opinion and accompanying analysis seek to stop these violations of law and assist consumers who are seeking to hold debt collectors accountable for illegal practices.

Read the advisory opinion.