CMG Alert: CFPB Warns Against Deceptive Practices with Online Bill Pay

The Consumer Financial Protection Bureau (CFPB) indicated that financial institutions may be engaged in a deceptive act or practice with their online bill pay service when paper checks are issued. Bill pay user accounts could be debited sooner than the date selected which the CFPB considers to be a deceptive practice if not adequately disclosed.

The CFPB indicated that examiners found financial institutions engaged in deceptive acts or practices by representing that payments made through the institutions’ online bill pay service would be debited to user accounts no sooner than the date selected by the users or a few days after that date. However, the institutions failed to disclose – or adequately disclose – that the debit might occur sooner than the date selected in instances where the payee only accepts paper checks. This practice caused some consumers to incur overdraft fees.

To read more, click here to access the CFPB’s Supervisory Highlights Report.