All that Glitters is Not Gold: The CFPB and the State of Maryland on Charging “Pay-to-Pay” Fees

May 19, 2022
By Joann Needleman

In January, 2022, the Consumer Financial Protection Bureau (the “Bureau”) launched an initiative to examine situations in which Americans are charged billions in junk fees. In support of this initiative, the Bureau published a request for information [1] seeking comments from the public related to fees that are not subject to competitive processes that ensure fair pricing.  The Bureau’s Director Rohit Chopra said, “[m]any financial institutions obscure the true price of their services by luring customers with enticing offers and then charging them excessive junk fees.  By promoting competition and ridding the market of illegal practices, we hope to save Americans billions.”   Exactly which types of fees would constitute the “junk fees” the Bureau is seeking to outlaw is unclear.  Some examples of fees that trouble the Bureau are these:

  • Hotels and concert venues adding “resort fees” and “service fees” that get layered on after rates they advertise to the public.
  • Punitive late fees charged by major credit card companies.
  • Overdraft and non-sufficient funds fees charged by banks.
  • “Pay-to-pay” fees.

The Bureau is analyzing data and information about consumers’ and small businesses’ experiences with any fees associated with their financial institutions, prepaid or credit card accounts, mortgage, any types of loans, or payment transfers.  The Bureau wants to uncover “potentially illegal practices or fees” and asked for data or information in any of these categories:

  • Fees for things people believed were covered by the baseline price of a product or service;
  • Unexpected fees for a product or service;
  • Fees that seemed too high for the purported service;
  • Fees where it was unclear why they were charged.

The Bureau received well in excess of 25,000 comments.  Historically the Bureau has also taken the position that the Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from collecting “any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless the amount has been expressly authorized by the agreement creating the debt.  See, 15 U.S.C. Section 1692f(1) and the Bureau’s amicus brief filed in the ninth circuit in October, 2021, in Thomas Lawson v. Carrington Mortgage Services, LLC.[2]   It is notable that the Bureau wrote a bulletin on the subject of pay-to-pay and other “inconvenient” convenience fees in Bulletin 2017-01.  We will have to stay tuned to see if the Bureau updates this bulletin as a result of the public comments it received to its “junk fees” initiative earlier this year.

Why this is important today is that in mid-May 2022, Maryland’s financial regulator issued industry guidance based upon a recent Fourth Circuit decision, also against Carrington Mortgage Services, LLC and coming to the same conclusion (it is important to emphasize that in 2018 Maryland adopted legislation making the FDCPA applicable to all stages and types of collections – including without limitation, first party, creditor collections AND third party collections).

The Maryland guidance states that if you charge “convenience fees” namely fees for making a payment online or by phone, it is important to consider these practical steps:

  • Review the original underlying agreement or terms and conditions that created the debt to assure the consumer (or small business) agreed to be charged “pay-to-pay” fees.
  • Understand that if the consumer’s original debt agreement did not expressly authorize “pay-to-pay” fees, you must check to see if a state statute or other law expressly or affirmatively authorizes them. If not – it is unlikely you may pass on “pay-to-pay” fees to consumers (or possibly small businesses).
  • Debt collectors are not permitted to enter into a separate agreement to impose “pay-to-pay” fees and the Bureau has taken the position such a separate agreement does not satisfy FDCPA Section 1692f(1)’s “permitted by law” prong because the statute allows debt collectors to collect amounts pursuant to only one type of agreement – the agreement creating the debt.
  • The Bureau also interpreted FDCPA Section 1692f(1) to mean that “pay-to-pay” fees are incidental to the underlying principal obligation – and therefore had to be revealed to a consumer (or small business) at the time the debt was incurred.
  • If you are servicing accounts for Maryland residents, please review the industry advisory published by Maryland’s Commissioner of Financial Regulation on May 12, 2022 which clarifies that “pay-to-pay” fees may not be collectible in the State of Maryland in relation to any form of loan or other extension of credit – unless such a fee was disclosed when the debt was created. Moreover, Maryland makes it clear that this holds true under the FDCPA (which by Maryland statute applies to any servicing of consumer debt regardless of by whom – creditor, first party agency, or third party debt collector).[3]

[1]  See,

[2] See,*4sxu4*_ga*NjYwMTk4OTM0LjE2NTI3MjAzNDE.*_ga_DBYJL30CHS*MTY1MjcyMDM0MS4xLjEuMTY1MjcyMTI4Ni4w

[3] See, advisory-conveniencefees.pdf (



Joann Needleman

Practice Leader & Member
| Clark Hill PLC
Joann Needleman leads the firm’s financial services regulatory and compliance practice and advises banks, financial institutions, and financial services entities on regulatory compliance matters. Joann prepares and represents these same financial institutions during state and federal supervisory examinations and regulatory investigations before agencies such as the Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC) and the Office of the Comptroller of Currency (OCC) as well as state financial services regulators and attorneys general. A former member of the Consumer Financial Protection Bureau’s (CFPB) Consumer Advisory Board, Joann provides her clients with useful strategies and common-sense solutions in order to prepare for areas of regulatory scrutiny.