ACA International Responds to CFPB Advisory Opinion on Payment Transaction Fees

ACA International logoFor Immediate Release

Contact: Anne Rosso May

Communications Director

ACA International

[email protected]

June 30, 2022 – Minneapolis, Minnesota – The Consumer Financial Protection Bureau released an advisory opinion Wednesday taking aim at debt collectors’ use of payment transaction fees, drawing continued concerns from ACA International about the CFPB’s regulatory processes and lack of stakeholder involvement in those processes. ACA leadership released the following statements related to the advisory opinion.

“ACA members are diligent about employing strong compliance management systems to ensure compliance with the wide range of federal and state laws that govern collections,” said ACA CEO Scott Purcell. “Credit card payment transactions have become a way of life, allowing consumers to conveniently and almost effortlessly pay their bills and often earn rewards with those cards. Such fees are used to offset the high cost of processing this type of payment and serve to link those costs to the consumer who chooses to use that payment method. The ‘old school’ check, envelope and stamp method also has a cost associated with it. Judges interpreting the law in this area have outlined what it takes to have a compliant system for payment processing and the fees associated with it.”

Leah Dempsey, shareholder at Brownstein Hyatt Farber Schreck and ACA’s lobbyist, said, “There is existing judicial precedent that supports payment transaction fees, something that has become the norm in modern payment processing. Unfortunately the (unelected) CFPB director, acting unilaterally and contrary to existing precedent, simply decided that payment transaction fees are somehow ‘junk.’ It is very troubling that the CFPB has issued an advisory opinion, without first engaging in a transparent and deliberative process with all stakeholders to understand why such fees make sense. Being able to recoup the payment processing costs incurred while collecting a past-due debt addresses the reality as well as the economics that otherwise such costs must be passed on to all consumers through inflated prices for goods and services if they are not paid for by the consumer who is responsible for the unpaid debt.”

The CFPB’s advisory opinion states:

  • The collection of any fee is prohibited unless the fee amount is in the consumer’s contract or affirmatively permitted by law.
  • A debt collector may only collect a fee when it is authorized by the agreement creating the debt or is “permitted by law.” Where no law expressly authorizes a fee, it is not “permitted by law,” even if no law expressly prohibits it.
  • Debt collectors violate the Fair Debt Collection Practices Act (FDCPA) when using payment processors who charge unauthorized fees at a minimum if the debt collector receives any amount of the fee whatsoever from the payment processor.

This topic represents an area that involves not only the FDCPA, but also underlying contracts, state laws as well as the courts interpreting all of them—and even the CFPB in its 2017 compliance bulletin on payment transaction fees.

“If a payment transaction fee for a particular payment type is an option, collection agencies ensure that such option is not prohibited by a state law,” Purcell said. “Additionally, the agency also offers a free payment option to satisfy the consumer’s debt and also informs the consumer of the optional cost associated with each method of payment, should the consumer choose an option more convenient or rewarding for them. In the end, those payment processing fees also serve to cover charges incurred for ‘card-not-present’ transactions, and many other risks and costs not present in 1977—when the FDCPA was passed. It’s unfortunate that existing rulemaking processes weren’t used by the CFPB director which, had they been used, would have brought light to the legitimate reasons these fees exist today and the benefits they bring consumers.”

Dempsey also stated: “In the CFPB’s Request for Information on fees, it included a single line about the debt collection industry, which did not include any evidence to show any abuse in this area or any data to support taking unilateral action in this area. This is not how changes in federal requirements should or can be made. Consumers and businesses alike will be harmed by this runaway and unchecked agency that acts first and asks questions later—or, not at all—about the impact of its unilateral and unwarranted actions.”

ACA International (ACA), the association of credit and collection professionals, is the largest membership organization in the credit and collection industry. Founded in 1939, ACA brings together third-party collection agencies, law firms, asset buying companies, creditors and vendor affiliates, representing tens of thousands of industry professionals. ACA produces a wide variety of products, services and publications, including educational and compliance-related information; and articulates the value of the credit and collection industry to businesses, policymakers and consumers.




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