A group of five banking trade associations has filed an amicus brief in a case before the Ninth Circuit Court of Appeals taking the stance that the Consumer Financial Protection Bureau and the appellants are wrong in asserting that the Fair Debt Collection Practices Act prohibits debt collectors from collecting convenience fees unless explicitly authorized.
A copy of the brief in the case of Thomas-Lawson v. Carrington Mortgage Services can be accessed by clicking here.
The case in question surrounds the use of convenience fees charged by a mortgage servicer when accepting payments from customers in certain channels, such as making payments online or over the phone. The defendant in this case also was involved in a similar case that the Fourth Circuit Court of Appeals recently overturned the dismissal of, allowing plaintiffs to pursue a claim under state law in Maryland.
Section 1692f(1) of the FDCPA prohibits “The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.” The CFPB in its brief argued that the phrase “permitted by law” means that convenience fees are prohibited unless expressly authorized by some law.
If the CFPB felt that strongly, the trade groups argue, then it could have addressed the issue when it enacted Regulation F. Instead, it declined to do so, the groups noted.
“Section 1692f(1) is not intended to restrict consumer options and contracting power,” the groups wrote in their brief. “There is nothing inconsistent with Section 1692f(1) to hold that even if the loan agreement does not expressly authorize the fee, courts could find based on state contract principles applied to separate facts relating to the disclosures and choices made by servicers and borrowers after the loan was originated (often years later) that a distinct, subsequent, and lawful agreement was created between the consumer and servicer.”
