Bureau highlights bill-pay disclosure problems

In its latest Supervisory Highlights, the CFPB discussed findings that one or more of the institutions it examined deceptively represented that payments made through an institution’s online bill-pay service would be debited on the date selected by the consumer or a few days after the selected date, while failing to disclose or failing to disclose adequately that, in instances where a payee accepts only a paper check, the debit may occur earlier than the selected date.

The paper bill-pay checks were sent several days prior to the consumer-designated payment date, at the discretion of the institution(s), apparently to ensure that payments were received by their due dates. The payment would be debited from the consumer’s account when the payee presented and cashed the check, which may have occurred earlier or later than the date selected by the consumer. The failure to notify consumers that their bill-pay payments, if made by paper check, may be debited on a date sooner than the date selected as part of the transaction caused some consumers to pay overdraft fees.

The Bureau reported that the institution(s) involved are revising their customer communications -- marketing and explanatory material -- to disclose that paper checks will be mailed before the date requested by the consumer and will be charged to the consumer's account when the checks are presented. Those institutions also worked on remediating consumers charged an overdraft fee when bill-pay checks hit their accounts before the payment date the consumer requested.