West Virginia Federal Court Certifies Class Action Challenging “Pay-to-Pay” Fees

On November 3, the U.S. District Court for the Northern District of West Virginia granted class certification certified a statewide class of borrowers challenging a credit union’s alleged assessment of unauthorized “pay-to-pay” fees under the West Virginia Consumer Credit and Protection Act. The plaintiff alleged that the institution imposed a 5 dollar fee each time consumers made monthly payments by phone or other electronic means, even though neither the loan agreement nor any statute authorized the charge.

Relying on records showing more than 1,400 such fees across 422 consumer loans with West Virginia addresses, the court concluded that the prerequisites for class treatment were met. The court found that the legality of the uniform “pay-to-pay” fee could be resolved with common proof, that a class action was the most efficient way to adjudicate the claims, and that potential class members could be readily identified through servicing records.

According to the complaint, the class action alleges violations including:

• Unauthorized service fees. The complaint alleges that the institution collected payment processing fees that were not expressly permitted by the governing loan contracts or by statute, constituting an unfair or unconscionable debt-collection practice under the West Virginia Consumer Credit and Protection Act.
• Misrepresenting amounts owed. The plaintiff alleges that by adding processing charges to monthly payments, the institution misstated the amount of the borrower’s obligation because the Promissory Note did not authorize those additional amounts.
• Improper collection charges. The complaint further alleges that the institution used “pay-to-pay” fees to recover its own servicing and collection costs and to generate additional profit from borrowers, rather than limiting compensation to interest and contractually permitted charges.

Putting It Into Practice: The CFPB previously took the position that “pay-to-pay” and other convenience fees could constitute an unfair, deceptive, or abusive act or practice under the Fair Debt Collection Practices Act and the Consumer Financial Protection Act. That position was later withdrawn as a part of the Bureau’s May 2025 deregulatory initiative (previously discussed here). While the rescission reduced federal supervisory pressure, it left intact the growing risk of private litigation under state consumer-protection laws. Servicers, lenders, and credit unions should review their payment-processing fee practices to ensure each charge is clearly supported by state law.