The Consumer Financial Protection Bureau (CFPB) today issued an advisory opinion affirming that debt collectors are often prohibited from charging “junk fees” or “pay-to-pay” fees under Federal law.  These charges are additional fees imposed to pay a debt a particular way, such as by phone or online.  The CFPB recognizes that most debt collectors allow consumers to make these payments without charging additional fees.  Today’s opinion targets those imposing unlawful fees, and is intended to assist consumers seeking accountability for illegal practices.

The advisory opinion offers interpretation of language in Section 808 of the Fair Debt Collection Practices Act (FDCPA).  This prohibits debt collectors from collecting any amount that is not expressly authorized by the underlying agreement or permitted by law.

The advisory opinion addresses the following areas related to debt collection practices, as described in the CFPB’s press release:

  • Identifies scope of illegal fees: The collection of any fee is prohibited unless the fee amount is in the consumer’s contract or affirmatively permitted by law.
  • Affirms that silence in the law is not an authorization: A debt collector may only collect a fee when it is authorized by the agreement creating the debt or is “permitted by law.” Where no law expressly authorizes a fee, it is not “permitted by law,” even if no law expressly prohibits it.
  • Clarifies role of payment processors: Debt collectors violate the FDCPA when using payment processors who charge unauthorized fees at a minimum if the debt collector receives a kickback from the payment processor.

View the CFPB’s full press release here, and read the advisory opinion here.

Today’s advisory opinion is part of the CFPB’s ongoing initiative to address junk fees in consumer finance, as announced in January, 2022.

This Member Alert is intended for members of the Receivables Management Association International, is for informational purposes only, and is in no way intended to provide legal advice. Members are encouraged to consult with an attorney of their choice for legal advice concerning this matter.