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What We’re Reading – "CFPB Cracks Down on Hidden Payment Fees"


One of the most important tasks for any consumer protection advocate is education. Oftentimes, consumer advocates and watchdogs find themselves responsible for bringing attention to issues that many consumers may not even know they are being affected by – until it’s too late.

The Consumer Financial Protection Bureau (CFPB) is shining a light on one such matter right now. As Mortgage Professional America reports, the Bureau is taking strides to protect consumers against companies that “charge expensive fees to customers who want to pay their bills by phone,” particularly those that “make misleading statements” about pay-by-phone fees or “fail to inform customers of much cheaper payment options.”

As CFPB director Richard Cordray said in a statement:

“The Bureau is warning companies about tricking consumers into more expensive fees when they pay bills by phone… We are concerned that companies are misleading consumers about pay-by-phone fees or keeping them in the dark about much cheaper or no-cost payment options.”


As Mortgage Professional America explains, most financial services companies tend to offer consumers several payment options. When paying by phone, consumers are often allowed to choose between using an automated system or speaking with a live agent; fees for the transaction can vary wildly based on a number of factors, including whether the consumer is paying by card or electronic check, or if the consumer is charged to expedite their payments, without being informed of any alternatives.

The CFPB’s concern, according to a story from Housing Wire, is “the application of those fees” and the worry that companies are “potentially steering customers into using those services over cheaper options.”

Here’s the bureau’s description of a recent example of this questionable corporate practice in action:

“…a recent bureau enforcement action alleged that a company and its service provider misled consumers into paying a $14.95 pay-by-phone fee by deceptively calling it a ‘processing’ charge… The fee was actually for posting payment to the account the same day. Customers paying by phone ended up being charged for expedited payment even though most of them did not need to post payment on the same day. Moreover, many were not aware of no-cost payment alternatives that would post after a delay.”

Though the CFPB has issued a compliance bulletin, at this time it does not mandate that companies notify their customers about pay-by-phone options and fees in any particular way; however, the Bureau has said that it “expects companies to review their practices” and recommends that companies and financial institutions:

“take steps to ensure that they are following laws related to pay-by-phone fees… Companies should review state and federal laws to confirm they can charge such fees, and review their policies and procedures. Companies should also review consumer complaints about fees that are charged.


The CFPB will continue to monitor the practices of companies that assess pay-by-phone fees for potential violations. The Bureau will use all appropriate tools to assess whether supervisory, enforcement, or other actions may be necessary.”

For more, we encourage you to read the full stories over at Mortgage Professional America and Housing Wire. If you are interested, the full compliance bulletin is available for your perusal at the CFPB’s website.

Led by Attorney Michael D. Finn with 50 years of experience, the Finn Law Group is a consumer protection firm specializing in timeshare law. Our lawyers understand vacation ownership as well as the many pitfalls of the secondary market of timeshare resales. If you feel you have been victimized by a timeshare company, contact our offices for a free consultation. Know your rights as a consumer and don’t hesitate to drop us a line with any questions or concerns.

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