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On January 26, 2022, the Consumer Financial Protection Bureau
(CFPB) launched an initiative to "save Americans billions in junk fees"
charged by banks and financial companies. e CFPB requested the
public's input, as well as feedback from financial institutions in order
to issue guidance and rules to target the most pressing concerns. In
addition to long-time targets like overdraft and late fees, the Bureau
was also looking at unexpected fees—sometimes labeled as "service
charges" or "convenience fees"—that seem too high for a service.
In April, Attorneys General (AGs) from 21
states and Washington, D.C., weighed in on this
issue, sending letters to the CFPB requesting
the agency to limit servicers from charging
convenience fees for using payment methods
to pay bills. e AGs argued that convenience
fees are unfair and abusive within the context of
servicing, because most borrowers cannot select
their mortgage servicer, mortgages have a long
duration, and convenience fees are not usually
authorized by the original loan documents. e
AGs believe that borrowers are effectively forced
to pay a fee to stay current.
On June 29, 2022, after taking into
consideration the requested public's input and
input from AGs and institutions, the CFPB
issued an advisory opinion affirming that federal
law often prohibits debt collectors from charging
"pay-to-pay" fees. ese charges, commonly
described by debt collectors as "convenience
fees," are imposed on consumers who want to
make a payment in a particular way, such as
online or by phone.
"Federal law generally forbids debt collectors
from imposing extra fees not authorized by the
original loan," CFPB Director Rohit Chopra
said. "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."
ZEROING IN
ON SERVICER
CONVENIENCE FEES
The CFPB and state regulatory bodies are closely scrutinizing all mortgage-
related fees, from the start of a loan to the ongoing servicing of the loan, to
ensure compliance with the Fair Debt Collection Practices Act.
Quick Take By: Joshua Fieldgrove
