Financial services companies were cautioned against misleading consumers about some pay-by-phone fees by the Consumer Financial Protection Bureau.
The bureau expressed concern in a bulletin about the possibility of companies misleading consumers on the purpose and amount of certain pay-by-phone fees or failing to disclose information about cheaper payment options.
Some companies which offer a pay-by-phone option for bills charge fees depending on the method of payment used – debit vs. credit cards, for example. Additionally, some offer expedited processing for a fee, although they also offer no- or low-fee options for non-expedited payments.
The CFPB cited a 2015 enforcement action against Green Tree Servicing alleging it misled consumers into paying a $14.95 pay-by-phone fee “by deceptively calling it a ‘processing’ charge.” The fee was actually for posting payment to the account the same day. Some consumers were unnecessarily charged for expedited payment, the bureau said. And many were not aware of no-cost payment alternatives that would post after a delay.
Some companies do not disclose their fees in writing upfront to consumers. Instead, they may depend solely on phone representatives to disclose relevant fees. These representatives may then fail to inform consumers about price differences between available pay-by-phone options. This may substantially harm consumers who wind up using much more expensive options because they are not informed that significantly cheaper options are available.
The CFPB does not mandate any particular way to inform consumers about pay-by-phone options and fees. However, it “expects companies to review their practices for potential risks of violating consumer financial laws and to address any issues,” the bureau said, promising continued oversight of such companies for potential violations.
“The bureau is warning companies about tricking consumers into more expensive fees when they pay bills by phone,” said CFPB Director Richard Cordray. “We are concerned that companies are misleading consumers about pay-by-phone fees or keeping them in the dark about much cheaper or no-cost payment options.”
The bulletin also lays out guidelines to help consumer financial companies comply with the law.