Federal Watchdog Targeting Some Debt-Collection Fees

So-called pay-to-pay charges added to campaign against ‘junk fees’

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Federal regulators, continuing their focus on so-called junk fees in consumer finance, have turned their attention to the “pay-to-pay” or “convenience” fees charged by debt collectors when consumers make a payment over the phone or online.

In an advisory opinion issued last week, the Consumer Financial Protection Board (CFPB) said that unless the original loan agreement or the law specifically authorizes the fees, they are in violation of the federal Fair Debt Collection Practices Act. The bureau said some debt collectors charge extra for payments made online or by phone, even if it’s cheaper and less time-consuming for them to process such payments.

“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,” CFPB Director Rohit Chopra said in a statement.

The federal watchdog agency has been on a campaign lately against what it calls “junk fees” that exploit consumers. It undertook a review last month asking whether $12 billion in credit card late fees are “reasonable and proportional,” for example. In January it asked for information from the public about fees charged by banks and financial companies that the public thinks are unfair or excessive.

The bureau’s blitz against such fees is one reason the U.S. Chamber of Commerce, the nation’s largest business organization, launched an advertising campaign last week against what it called Chopra’s “ideologically driven agenda.” The chamber said the CFPB director is on a mission to “radically change the nature of America’s financial services industry” and that, if successful, Chopra’s actions would hurt innovation and consumer choice for credit cards, loans, and other financial services.

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  1. CFPB. “CFPB Moves to Reduce Junk Fees Charged by Debt Collectors.”

  2. U.S. Chamber of Commerce. “US Chamber of Commerce Launches Campaign to Rein In Out-of-Control CFPB Director Rohit Chopra.”

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