The Consumer Financial Protection Bureau recently released a Compliance Bulletin regarding fees that companies may charge consumers when they pay by phone.
The Bulletin highlights certain practices related to phone payment fees that may violate the Dodd-Frank Act’s prohibition on committing unfair, deceptive, or abusive acts and practices (UDAAPs), including:
- Failing to disclose all available phone payment options when they carry materially different fees;
- Misrepresenting the available payment options or that a fee will be applied if a person pays by phone;
- Not disclosing that a phone fee will be added, or creating the impression that there is no service fee when, in fact, there is one; and
- Not monitoring employees or service providers in a way that could lead to misrepresentations or failing to disclose all available payment and fee options.The bulletin echoes the CFPB’s previous guidance regarding the potential for consumer harm when companies have incentive programs for employees that process phone payment fees. The CFPB cautions that when employees are given incentives to steer consumers towards certain payment methods, or even when employees are simply pressured to complete calls quickly, it can increase the risk that the company will violate a UDAAP law.
- This guidance is applicable for any business or entity that solicits or offers payments over the telephone. Companies should review their internal policies and procedures to ensure they align with the CFPB’s guidance. The Bulletin does not require that companies disclose pay-by-phone fees in any particular fashion. However, it does recommend that companies take certain proactive steps to ensure compliance, including:
- This last point highlights an issue that is raised several times throughout the bulletin, which relates to entities that rely on phone representatives to disclose applicable fees. Even if a company has adequate policies and procedures in place regarding fee disclosures, there is still the risk of a UDAAP violation if phone representatives deviate from standard call scripts. The bulletin stresses the importance of adequate monitoring to ensure that both employees and third-party service providers appropriately disclose fees and make consumers aware of available options.
- Reviewing state and federal law to confirm whether the company may charge phone payment fees;
- Reviewing policies and procedures on pay-by-phone fees, both internal and those of service providers, including call scripts and training materials;
- Incorporating pay-by-phone concerns into the monitoring or audits of consumer calls; and
- Reviewing consumer complaints.
While Compliance Bulletins are non-binding statements of policy, they are important guidance that reflects the agency’s stance, and they indicate potential areas of enforcement. Companies should carefully review these bulletins to ensure they are not risking an enforcement action. Troutman Sanders’ attorneys have significant experience counseling companies on compliance methods, risks and strategies – before and after enforcement actions.