Class Certification for Lawsuit Over Pay-to-Pay Fees

Sheppard Mullin’s Fintech Blog reports that the US District Court for the Northern District of West Virginia granted class certification in a lawsuit challenging a credit union’s alleged imposition of “pay-to-pay” fees on borrowers.

The case, Joseph Boczek v. Pentagon Federal Credit Union, arises from claims that, despite no statutory or contractual authorization, the institution assessed a $5 fee each time borrowers made monthly payments by phone or electronically.

The ruling allows the case to proceed as a statewide class action, enabling borrowers with similar experiences to pursue claims collectively.

The underlying complaint alleges that the credit union imposed unauthorized service fees, misrepresented amounts owed, and improperly collected charges intended to recoup operational costs or generate profit. The alleged fees were assessed uniformly across more than 422 loans, resulting in over 1,400 instances of disputed charges.

Borrowers claim that these practices violated the West Virginia Consumer Credit and Protection Act, which prohibits unfair or unconscionable debt-collection practices. The complaint also notes that prior guidance from the Consumer Financial Protection Bureau had indicated such convenience fees could be deemed unfair, though the agency later rescinded that guidance in May 2025.

Despite the federal deregulatory change, the potential for private claims under state law remains.

The court found that common questions predominated, including whether the pay-to-pay fees were legally permissible. Class members could be identified through loan servicing records, making the class action the most efficient mechanism to resolve the claims.

The decision allows plaintiffs to pursue claims collectively, streamlining potential recovery and judicial resources.

Even in the absence of federal enforcement, legal counsel evaluating consumer-finance exposure should consider state consumer-protection statutes on routine fee practices. Reviewing authorization for fees, loan documentation, and procedural compliance with state law can mitigate litigation risk.