Can we charge a returned item fee on this loan?

Posted By: Anonymous

Can we charge a returned item fee on this loan? - 08/25/14 03:57 PM

We are allowed to charge this fee per state law.

However, we are not sure if it is contracted for with our current language. We don't explicitly state that we have a returned item fee- just that any fees disclosed are subject to change without notice (on our TILA). But, the returned item fee isn't stated in our note. Which makes me think we can't charge a fee.

But since we have the "subject to change" language, then could we charge the fee?
Posted By: BurntSienna

Re: Can we charge a returned item fee on this loan? - 08/25/14 04:38 PM

The "subject to change" allows you to change/raise a properly disclosed fee (say from $20 to $25 for XYZ). The "subject to change" does not give you the right to charge a new fee for something you didn't disclose. If you haven't disclosed a "returned item fee" then you would have to send out a notice to all existing loan customers that you will begin charging this fee on <date 30 days or more in the future>. Then wait the 30 or more days, then you can begin charging.
Posted By: Anonymous

Re: Can we charge a returned item fee on this loan? - 08/25/14 05:03 PM

So even though it isn't a change in terms per Reg Z, we should be okay if we treat it like one and ensure proper notification before adding the fee?
Posted By: Dan Persfull

Re: Can we charge a returned item fee on this loan? - 08/25/14 05:11 PM

So even though it isn't a change in terms per Reg Z, we should be okay if we treat it like one and ensure proper notification before adding the fee?

Not IMO. If you didn't contract for the fee up front then you can't unilaterally add additional charges after confirmation. Especially if you're dealing with closed-end credit.

You need to be talking to the bank's attorney.
Posted By: Richard Insley

Re: Can we charge a returned item fee on this loan? - 08/25/14 08:05 PM

I agree. If it's a loan (closed-end credit), you can do no more than the note states. Any change would require a modification agreement which would have to be executed by the borrower.