CFPB interpretation of convenience fees under FCDPA is improper

February 23, 2022

The Consumer Financial Protection Bureau’s strict interpretation of “permitted by law” in the Fair Debt Collection Practices Act is improper, and will deprive consumers’ of important, cost-saving choices, CUNA and other organizations wrote in a brief filed Tuesday in the 9th U.S. Circuit Court of Appeals.

CUNA filed the brief in Thomas-Lawson v. Carrington Mortgage Services, a case involving convenience fees when making mortgage payments.

The CFPB filed a brief in October 2021 claiming the FCDPA’s “permitted by law” language bars debt collectors from collecting convenience fees unless explicitly authorized.

CUNA and the organizations provide background on consumers’ informed use of convenience fees and the constraints on the content of mortgage loan agreements.

“CFPB’s interpretation carries little persuasive weight because it is contrary to the plain language of the FDCPA, the brief reads. “More significantly, despite ample opportunity to do so, the CFPB opted not to enact the FDCPA interpretation it advances here through administrative rulemaking.”

The brief also notes that convenience fees are not assessed without a borrower’s knowledge, the fact and amount are disclosed before borrowers elect to continue with the payment method.

CUNA filed the brief with the Mortgage Bankers Association, American Bankers Association, National Association of Federally-Insured Credit Unions, and the American Financial Services Association.