CFPB, FTC File Amicus Brief in 11th Circuit FDCPA Convenience Fee Suit

The CFPB and FTC recently filed a joint amicus brief in a case in which two borrowers allege that a loan servicer violated the FDCPA by charging convenience fees for mortgage payments made online and over the phone.  Although not parties to the case, the agencies filed an amicus brief on the basis that each has a “substantial interest in the issues.” 

In their brief, the CFPB and FTC argue that an FDCPA provision prohibiting debt collectors from collecting “any amount (including any interest, fee, charge, or expense incidental to the principal obligation)” not expressly authorized in the agreement creating a debt or permitted by law applies to “pay-to-pay” or convenience fees. The agencies claim that obtaining borrowers’ consent to the fees at the time of payment is not sufficient where the agreement originally creating the debt does not explicitly authorize such fees.

The agencies noted in particular that convenience fees charged to consumers for online and phone payments are often substantially higher than the cost of processing those payments. In the underlying case, the mortgage servicer purportedly charged consumers $7.50 to $12 for phone and online payments that were processed by a third party payment processor for $0.40 each. 

The CFPB previously took a similar position in an advisory opinion covered by WBK last year.