Grant Premo Discusses FDCPA and FCRA Landscape in Inside the CFPB
Inside the CFPB
Bradley attorney Grant Premo discussed the CFPB’s approach to interpreting and enforcing the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA) at a recent Mortgage Bankers Association servicing solutions conference covered in Inside the CFPB. In a panel discussion at the conference, Premo suggested lenders stay abreast of the developments and adjust their policies and practices appropriately to prevent litigation.
Premo discussed pay-to-pay or convenience fees charged to consumers who want to make a payment in a particular way, such as online or by phone. He said it’s long been interpreted that if a state law is silent on a fee, the FDCPA permits it. However, Premo noted that in a June 2022 advisory opinion, the CFPB took a contrary stance that if both a loan contract and state law are silent on a fee, it’s not permissible.
He cited Alexander v. Carrington MortgageServices, a putative class action brought under the Maryland Consumer Debt Collection Act, which incorporates the FDCPA. A district court ruled that a $5 convenience fee charged by Carrington for online payments was legal. However, the Fourth Circuit overturned that opinion, noting that the fees weren’t incidental to the debt and that the law’s silence on the fee wasn’t permission to charge it.
Premo said Alexander shows that “there’s going to be litigation risk with any fee that you charge that is not expressly provided for in the note and mortgage or expressly allowed under state law.” He said when evaluating cases involving state debt collection laws without FDCPA claims, it’s worth taking into consideration how courts have interpreted any FDCPA sections analogous to the relevant state law provisions. He explained some state laws expressly incorporate their federal counterpart while some courts use the FDCPA as reference when interpreting similar state laws.
“That may help guide you through how you’re going to analyze that case, how you’re going to assess the risk under that state statute,” Premo said.
The full article, “Attorneys Discuss Shifts in FDCPA, FCRA Landscape,” was published in Inside the CFPB on March 6, 2023.