Don’t be fooled into big pay-by-phone fees

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If you’re a fan of dialing in to pay your bills, listen up: You may have been duped into paying too much for the privilege.

The nation’s consumer watchdog agency recently issued a bulletin warning companies against tricking customers into paying expensive and unnecessary pay-by-phone fees.

“We are concerned that companies are misleading consumers about pay-by-phone fees or keeping them in the dark about much cheaper or no-cost payment options,” said Richard Cordray, director of the Consumer Financial Protection Bureau.

The bureau noted that some companies charge a fee for phone payments that are expedited, but also offer consumers a no-fee phone payment option if the payment posts after a processing delay.

Companies risk violating the law if they mislead consumers about their options, the bureau said.

For example, the agency recently took action against a company and its service provider for allegedly misleading consumers into paying a $14.95 pay-by-phone fee by deceptively calling it a “processing” charge when the fee actually was for posting the payment the same day.

Customers ended up paying for expedited payments even though most of them didn’t need the service in order to pay on time and avoid late fees, the bureau said. In addition, many customers were not aware of the no-cost alternative that would post phone payments after a delay.

Other potential problems include companies not disclosing to consumers that pay-by-phone fees are being assessed or that cheaper payment options are available, the bureau said.

Some companies don’t disclose their fees in writing. Instead, they rely on phone representatives to disclose them, according to the agency. “These representatives may then fail to inform consumers about significant price differences between available pay-by-phone options,” the bureau said.

The agency said it does not mandate any particular way to inform consumers about pay-by-phone options and fees.

But it is telling companies to review their policies to make sure they are following state and federal laws against unfair, deceptive or abusive practices. Companies also should review applicable laws to confirm that they can charge such fees, the agency said.

Consumers can help protect themselves by remembering to ask if certain payment options carry fees and whether there are cheaper ways for paying on time, said Gail Hillebrand, associate director at the bureau’s division of consumer education and engagement.

She said consumers can avoid last-minute payment fees by setting up bills for automatic payment, or by setting aside a regular day and time each week to review and pay bills.

Companies with compliance questions can contact Chantal Hernandez at the bureau’s office of supervision policy at 202-435-7084. Consumers can file complaints with the Consumer Financial Protection Bureau online at www.consumerfinance.gov/complaint/