CFPB Issues Advisory Opinion On Debt Collection Convenience Fees

The Consumer Financial Protection Bureau has issued an advisory opinion interpreting the federal Fair Debt Collection Practices Act to prohibit a debt collector from charging a convenience fee to consumers unless either the agreement creating the debt or applicable law expressly authorize the fee. The advisory opinion interprets 15 U.S.C. § 1692f(1)’s prohibition on collecting “any amount (including any interest, fee, charge or expense incidental to the principal obligation) unless such amount is expressly authorize by the agreement creating the debt or permitted by law.” The CFPB now interprets the provision to prohibit “any amount collected . . . including, but not limited to, any interest, fee charge or expense that is incidental to the principal obligation.” The CFPB also interprets the phrase “permitted by law” to mean “expressly permitted by law.” To the CFPB, for a debt collector to collect a fee, that fee must be either (i) expressly permitted in the underlying agreement for the debt (and the fee is not prohibited by other law) or (ii) expressly authorized by a statute or regulation. The CFPB uses this interpretation to prohibit collectors from charging a fee to make debt collection payments through a particular channel—commonly referred to as “convenience fees” or “pay to pay fees”—unless the fee fits into either option (i) or (ii) above. Read More