MARTINSBURG, W.Va.—A federal court has certified a statewide class action against the $30-billion Pentagon FCU that is accused of charging unauthorized “pay-to-pay” fees to borrowers, according to JD Supra.
The U.S. District Court for the Northern District of West Virginia granted class certification to borrowers who claim the credit union violated the West Virginia Consumer Credit and Protection Act by imposing a $5 fee each time consumers made monthly payments by phone or other electronic means—charges allegedly not authorized by either loan agreements or state law, JD Supra explained
Court records showed more than 1,400 such fees applied across 422 consumer loans tied to West Virginia addresses. The court found that whether the uniform “pay-to-pay” fee was lawful could be decided using common evidence and that class action treatment was the most efficient method for resolving the claims, JD Supra said.
According to the complaint, borrowers contend that the institution:
- Assessed unauthorized service fees that were neither permitted by contract nor by statute, amounting to unfair or unconscionable debt-collection practices
- Misrepresented amounts owed by adding unapproved processing fees to scheduled payments
- Improperly profited from collection charges by using the fees to offset internal servicing costs
JD Supra noted the case highlights continued exposure under state consumer-protection laws even after the Consumer Financial Protection Bureau rescinded its prior federal guidance classifying “pay-to-pay” and similar convenience fees as potentially unfair or deceptive. The CFPB’s withdrawal of that position in May 2025 reduced federal oversight but did not shield financial institutions from private or state-level litigation.
Legal experts caution that servicers, lenders, and credit unions should closely review any payment-processing fees to ensure such charges are explicitly authorized under applicable state law and governing loan documents.