CUs Need to Pay Attention To Convenience Fees

Credit unions that have instituted “convenience fees” as a means of generating additional revenues could find themselves on the receiving end of a lawsuit or in the crosshairs of the CFPB, one legal and compliance expert is warning.

David Reed, partner at Reed & Jolly, PLLC, told CUToday.info that financial institutions are entering a new period of scrutiny on the fees they charge for services, and if the charges more than pass through the CU’s costs to the member the CFPB may be asking a lot of questions and possibly levying fines.

One area organizations should pay particularly close attention to now is collections, which may have lulled many credit unions into a “false sense of security” due to ultra-low delinquencies in recent years, Reed said.

“Collections department regulatory compliance, this is a growing area of concern,” said Reed. “I say this because we are staring down a now active CFPB, which just issued a pay to pay advisory. And, collections activity, with what is looming ahead in the economy, will likely be rising.”

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