On June 29, the Consumer Financial Protection Bureau (CFPB or Bureau) issued an advisory opinion focused on consumer debt collectors and the convenience fees they charge for some payments, such as online or by phone.

Convenience fees — common in many types of financial transactions — have recently been categorized as “junk fees” by the CFPB. (The agency has lumped many fees into this category whether they are credit card late fees, overdraft fees charged by banks, or, now, transaction fees for certain expedited forms of payment.) Another term of art used by the federal agency is “pay-to-pay.”

The CFPB is focusing its charge against convenience fees via Section 808 of the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from collecting any amount that is not expressly authorized by the underlying agreement or permitted by law.

The CFPB foreshadowed this position five years ago. In 2017, the CFPB issued a compliance bulletin that “provides guidance to debt collectors about compliance with the [FDCPA] when assessing phone pay fees,” and asserted that such fees violated the FDCPA unless they were authorized by the underlying debt agreement or state law. And, the Bureau states that for a fee to be permitted by state law, it must be explicitly permitted — mere silence in state law does not, in the Bureau’s view, equate to the fee being “permitted.”

This advisory opinion affects not just debt collection but will trickle down to the payment processors debt collectors use to facilitate payments: “Debt collectors may violate FDCPA section 808(1) … when using payment processors who charge consumers pay-to-pay fees,” especially if the debt collector receives a portion of the fees from the payment processor.

The CFPB acknowledges that some courts have held that pay-to-pay fees do not violate FDCPA Section 808(1) because such fees are not “incidental to the principal obligation.” However, this reading does not align with the CFPB’s interpretation of Section 808(1).

Notably, the advisory opinion says nothing about convenience fees charged by creditors. Creditors are not subject to the FDCPA, and the 2017 bulletin cited in the advisory opinion (and discussed above) does not take the position that such fees are per se illegal when charged by creditors. Rather, the bulletin warns creditors to make appropriate disclosures about the existence and amounts of fees and to disclose fee-free payment options to consumers. Still, it is difficult to ignore the pejorative language used by the Bureau to describe convenience fees as “junk fees” and “pay-to-pay fees,” and we believe creditors may encounter pressure from the Bureau relating to convenience fees, even though creditors were omitted from the advisory opinion.