CFPB warns debt collectors about ‘pay-for-pay’ fees

By Jon Hill (June 29, 2022, 4:07 p.m. EDT) – The Consumer Financial Protection Bureau decided Wednesday to limit the use of so-called convenience fees in the debt collection industry, issuing an advisory notice that debt collectors are generally prohibited from charging additional fees for payments made online or over the phone.

The CFPB’s advisory opinion finds that such “payment for payment” charges violate the Fair Debt Collection Practices Act unless they are expressly authorized by the contractual wording of the debt to be collected or are otherwise specifically authorized by law.

“Federal law generally prohibits debt collectors from charging additional fees not authorized by the original loan,” said CFPB Director Rohit Chopra…

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