CFPB Bulletin: Guidance on Phone Pay Fees

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The Consumer Financial Protection Bureau (CFPB) has issued guidance for financial institutions that assess fees for pay-by-phone services, also known as phone pay fees (CFPB Compliance Bulletin 2017-01). The guidance was issued in response to several Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) and Fair Debt Collection Practices Act (FDCPA) violations found by CFPB examiners, including misleading consumers about phone pay fees, and keeping consumers in the dark about much cheaper payment options.

The guidance summarizes current law, and does not mandate any new requirements for notifying consumers about phone pay fees. However, it is recommended that credit unions consider the CFPB's suggestions to avoid UDAAP or FDCPA violations:

  • Review state and federal laws to confirm such fees may be charged;
  • Review debt agreements to determine whether such fees are authorized by the contract;
  • Review internal and vendor policies and procedures on phone pay fees;
  • Review account disclosures to ensure information regarding phone pay fees is included;
  • Incorporate phone pay issues in regular monitoring or audits;
  • Review consumer complaints regarding phone pay fees;
  • Perform regular reviews of third party vendors as to their practices;
  • Review employee incentive programs to see if there are incentives to steer borrowers to certain payment types or to avoid disclosures; and
  • Review corrective action program to address any violations and to reimburse members, when appropriate.

Click here to view the bulletin.

Source: PolicyWorks

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