Posted By: Nicole
Late fee reimbursement - 09/17/21 04:58 PM
Hello, if we inadvertently charged a late fee before the "15 day" period was up and need to reimburse customer, can we apply as a principal reduction, or do we need to directly reimburse the customer?
Thank you!
Posted By: rlcarey
Re: Late fee reimbursement - 09/17/21 05:06 PM
I would be sending them a check. They paid an extra $15 that they could have used somewhere else. Putting that against principal does not really make them whole.
Posted By: Nicole
Re: Late fee reimbursement - 09/17/21 05:22 PM
Ok thank you! I got questioned if we have to send them a check? Do you know regulatory wise if we can post it against there principal or would we be critized?
Posted By: rlcarey
Re: Late fee reimbursement - 09/17/21 05:41 PM
Refunds like this are a UDAAP issue - there are no specific regulations, it comes down to common sense.
Posted By: Andy_Z
Re: Late fee reimbursement - 09/17/21 06:00 PM
To be clear, you are reimbursing it because it was both charged and paid? If so I agree with Randy. You put that money back in the borrower's hands and you assure them it was not reported to the credit bureau as late.
Next, in that these fees are a systems function you need to figure out how it was added, or if the bank had the payment but failed to correctly apply it. Either way, you need to ask yourself, could it happen again, and what can you do to prevent that? You also need to know if this has happened before. Hopefully this was the first anyone is aware of and it was not a systemic issue. If it has happened before it could be a real UDAP issue.