Collector - August 2020 - 31

"Even though the CFPB has not
prohibited the use of convenience
fees, it has identified their problematic
nature as an issue that it will monitor
and, if necessary, seek to enforce."
law neither permits nor prohibits such
fees. Incidental fees expressly permitted
by contract would be impermissible if
prohibited under state law ...
"The proposals under consideration
would specify that a debt collector charges
convenience fees indirectly when, for
example, a third party charges the fee but
the collector receives a portion through a
fee-splitting arrangement. Fees charged in full
by, and paid in full directly to a third-party
payment processor, would not be collected
directly or indirectly by the collector and
would not be covered under the regulation.
(Whether such fees could be charged also
could depend, however, on the contract
establishing the debt or other laws.)"
Although not an official advisory opinion,
the CFPB's suggestion that Section 1692f
does not prohibit a payment processor from
charging a convenience fee when the fee is
not shared or split with the debt collector
is in line with its subsequent Compliance
Bulletin 2017-01: Phone Pay Fees.
Bulletin 2017-01 addresses pay-byphone services, defined to include (1)
providing consumers with the option
of making payments over the phone by
using an automated system or speaking
with a live representative; (2) providing
consumers the option to make payments
by using a credit card, debit card, or
electronic check or to have their payment
expedited; and (3) third-party service
providers that handle and process
payments on behalf of entities.
The bulletin generally allows pay-byphone fees but cautions companies to

COLLECTOR 08.20

beware of unfair, deceptive, or abusive
acts or practices (UDAAPs) that may
potentially result from such fees or at least
be identified as such.
In sum, even though the CFPB has not
prohibited the use of convenience fees,
it has identified their problematic nature
as an issue that it will monitor and, if
necessary, seek to enforce. Debt collectors
should continue to monitor what the CFPB
has to say on the subject.

BEST PRACTICES
Convenience fees can help defray the
administrative cost of debt collection
but they also expose debt collectors, and
perhaps even payment processors, to
potential liability. As a best practice, if
any debt collector charges consumers a
convenience fee, the debt collector should
clearly disclose that a fee will be charged
and the amount of the fee. The fee itself
should be limited to that actual cost of
processing the payment and not shared or
split with the debt collector.
Further, it is advised that the debt
collector offer the consumer at least one
payment option that does not impose a fee
(e.g., sending a payment by mail). When
the consumer chooses a payment method
with a fee option, you should retain
evidence of the consumer's authorization
and agreement to pay the fee, as well as
any fee-free alternatives that existed.
David N. Anthony is a partner and
Jonathan P. Floyd is an associate attorney at
Troutman Sanders LLP.

1

Debt collectors should
be wary of charging
any convenience fees to
consumers without first
analyzing the FDCPA and state
law implications.

2

A CFPB bulletin allows
pay-by-phone fees but
cautions companies to beware
of unfair, deceptive, or abusive
acts or practices (UDAAPs)
that may potentially result.

3

Offer consumers at least
one payment option that
does not impose a fee.
31



Collector - August 2020

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