The Consumer Financial Protection Bureau (CFPB) is monitoring the consumer financial marketplace to spot companies’ attempts to charge junk fees in new ways after the regulator cracked down on older methods.
“As companies are stopped from charging many of these fees, people are facing new risks as companies experiment with new sketchy fee tactics, which are often illegal,” CFPB General Counsel Seth Frotman and Supervision Director Lorelei Salas wrote in a Thursday (Dec. 19) blog post.
For example, the CFPB has cited at least one debt collector for unlawfully amending consumers’ existing contracts in an attempt to allow fees that they are otherwise prohibited from charging, according to the post.
“It’s particularly suspect when people have no choice about doing business with the company, such as a servicer or debt collector, when the fees are buried in ‘terms of service’ or other obscure places, or when companies use ‘dark patterns’ or other tricks to try to get people to ‘agree’ to fees,” Frotman and Salas wrote in the post.
Loan servicers and debt collectors are trying new tactics like this after the CFPB targeted practices like charging fees that consumers didn’t agree to when they signed up for the original deal, the post said.
Examples of these include “pay to pay” fees imposed on consumers who want to make a payment in a particular way, fees for payoff statements, made-up “service charges,” unauthorized fees for paying in installments, and arbitrary “collection fees,” per the post.
“The CFPB is monitoring the market to ensure that companies don’t attempt to evade prohibitions on illegal junk fees with other illegal tactics,” Frotman and Salas wrote.
In a report released in April, the CFPB said junk fees “impede fair and competitive pricing” by making pricing more complex and making it difficult for buyers to compare the prices of different sellers.
Also in April, the CFPB said it was targeting junk fees in the mortgage industry after finding that mortgage servicers had charged illegal fees, sent deceptive notices to homeowners and violated loss mitigation rules that help struggling borrowers keep their homes.
In July, the regulator said it found that junk fees are widespread among payment processing companies that help school districts process students’ school lunch payments.
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