Urgency Language, Convenience Fees May Be FDCPA Violations
The CFPB has issued new guidelines aimed at protecting consumers from predatory “urgency fees” that lead consumers to believe that their only option is to pay the fee if they wish to avoid penalties and interest. Such behaviors may be considered unfair, deceptive, or abusive actions (UDAAPs) prohibited by law in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
It is now common practice for creditors and debt collectors to assign “convenience fees” for various forms of payment. These fees can be assessed when the consumer pays by phone, via a web payment portal, using cash, or sending a check by mail. This in and of itself is not a violation of Dodd-Frank or the FDCPA. However, these fees are not always clear, nor are they always explained to the consumer. These are violations of consumer protections and qualify as false, deceptive, and misleading representations. When a creditor or debt collector fails to inform consumers of the fees associated with various options, an FDCPA violation attorney in Nevada can pursue damages against the company.
Creating False Urgency
Language matters and the law protects consumers from predatory language that unfairly leads them to believe that their payment options and rights to information regarding fees and payment options are limited beyond what the law allows. One example is informing consumers that there will be a fee for immediate phone processing without informing them that there are other no-fee payment options available for phone processing one or two days later. While the law allows creditors and debt collection companies to set due dates and deadlines for debt payments, it does not allow creditors to create dishonest due dates that are essentially chosen at random. Ultimately, any date that is set must allow consumers a fair and reasonable opportunity to gather the funds needed to make the payment.
New Guidelines to Protect Consumers
The CFPB has taken notice of practices that create false urgency and mask the fees associated with payment options. The agency has issued new guidelines that are intended to stem these practices and further protect consumers. These guidelines include enhanced training for employees regarding the information they must disclose to consumers, review of internal policies and practices that may violate the FDCPA or other laws, and review of incentive programs that may encourage employees to violate the law in order to earn bonuses, promotions, etc. by steering consumers towards higher cost payment options.