CFPB Advisory Opinion Bans Debt Collectors from Charging Unauthorized Convenience Fees

  • The CFPB issued an Advisory Opinion affirming the agency’s position that federal law generally prohibits debt collectors from charging “convenience fees” on consumers making payments, and providing guidance to the fees that debt collectors can lawfully collect.
  • Specifically, the Advisory Opinion explains that Section 808(1) of the Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from collecting any such fees unless they are “expressly authorized by the agreement creating the debt or permitted by law.” In order for a fee to be “permitted by law,” it must be expressly authorized by law—a lack of express prohibition cannot be interpreted as permission.
  • The CFPB also noted that debt collectors may be in violation of the FDCPA if they use payment processors who charge convenience fees. If and when a processor collects a fee form a consumer, and remits any amount to the debt collector in connection with that fee, the collector is also in violation of Section 808(1).