CFPB Issues Bulletin on Pay-By-Phone Fees
08/09/17 – The Consumer Financial Protection Bureau (CFPB) issued a compliance bulletin regarding pay-by-phone fees.
According to the bulletin, the Bureau is concerned about companies that potentially mislead consumers about the purpose and amount of certain pay-by-phone fees or fail to disclose to consumers other methods of payment that are either no-cost or lower cost.
The bulletin addresses the practice by financial service companies of giving consumers several options to make payments. One option allows consumers to pay bills by phone using an automated system or speaking with a live customer representative. For this option, companies may charge different pay-by-phone fees depending on what method of payment the consumer uses. Consumers may also be charged an additional fee to expedite phone payments, though many companies offer consumers no-fee or lower-fee pay-by-phone options that post after a delay.
The Bureau’s bulletin identifies practices that it considers potentially deceptive or unfair and a possible violation of the Dodd-Frank Act. These include:
- Misleading consumers about the purpose of pay-by-phone fees. The CFPB found that some companies do not adequately explain that a pay-by-phone fee is necessary only if the consumer wishes to expidite the payment.
- Failing to disclose to consumers cheaper payment options. The Bureau found that some companies do not disclose their fees in writing upfront to consumers. Consumers may then chose a more expensive payment option because they are unaware of other lower cost payment options.
The bulletin states that the CFPB is not mandating any particular way to inform consumers about pay-by-phone options and fees. However, the Bureau expects companies to review their practices for potential risks of violating consumer financial laws and to address any issues.
Furthermore, the CFPB recommends that companies 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.