Paying Your Credit Card By Phone; What Are The Fees?

A compliance bulletin discussing fees charged to consumers to pay-by-phone (“Bulletin dated July 31, 2017”) was published by  The Consumer Financial Protection Bureau (the “CFPB”),    The CFPB stated that these fees may amount to unfair, deceptive or abusive acts or practices known as “UDAAP”.  UDAAP practices are prohibited by federal law under 12 USC 5531 and under state law.    As a general practice, financial services providers offer consumers several ways to make payments, including pay-by-phone options.    Pay-by-phone options provide for different payment alternatives such as using an automated phone option or making a payment with a customer service representative.    The Bulletin dated July 31, 2017 discusses providers that charge consumers pay-by-phone fees and/or expedited phone payment fees which are not consistent.

The Bulletin dated July 31, 2017 states the following practices may be classified as UDAAPs:

  1. A recent action was noted, in which the CFPB alleged that a financial services provider deceptively identified a $14.95 pay-by-phone fee to consumers as a “processing” charge.  In actuality, the provider charged consumers this fee for the service of posting the consumers’ payment to his/her account the same day, when in fact many consumers did not need their payments to post to their accounts on the same day.  This could be misrepresentation of a fee or cost.
  2. Under this action, no-cost payment alternatives existed, but the provider had failed to make consumers aware of these no-cost payment alternatives. The provider did not make the consumer aware of this option.
  3. The Bulletin dated July 31, 2017, also noted that many providers rely on their telephone customer service employees to disclose all pay-by-phone fees and available options to consumers, and do not disclose upfront in writing their fees or pay-by-phone options. According to the CFPB, the failure by employees to inform consumers about substantial price differences between pay-by-phone options may “substantially harm” consumers. Consumers may utilize more expensive pay-by-phone options if not advised that other options are available.

The conclusions from this Bulletin are that a provider cannot misrepresent a fee or cost of a phone payment, fail to disclose a no-cost option and/or fail to make adequate consumer disclosures about these options.  We have advised our clients to review the disclosures given in connection with loan and credit card payment options, both written and given by the customer services representatives.

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