On January 9, the California Department of Financial Protection and Innovation (CA DFPI) announced a consent order with Credova Financial, LLC, (Credova) to resolve allegations that, in violation of the California Consumer Financial Protection Law, the company failed to disclose potential third-party fees to consumers. Pursuant to the settlement, Credova is required to pay a $50,000 penalty and disclose potential third-party convenience fees to consumers in the future.

Credova operates an internet-based platform that allows merchants to offer installment contracts to their customers. Credova contracts with a third-party servicer for all installment contract payments. The third-party servicer charges convenience fees: $15.00 when consumers choose to pay their installments over the phone; $10.00 when consumers choose to make a one-time payment online; and $2.00 when consumers set up recurring online payments. While there was always a fee-free method of payment available, the CA DFPI took issue with the fact that “Credova failed to disclose potential optional convenience fees a consumer might later choose to incur as part of a consumer’s initial contract.” The CA DFPI concluded that the practice was deceptive since Credova did not inform customers that the servicer may provide payment options that could cause the customers to incur a fee if the customer did not want to utilize the free payment method available.