WASHINGTON–The Consumer Financial Protection Bureau (CFPB) said it has launched an initiative to “save households billions of dollars a year by reducing exploitative junk fees charged by banks and financial companies.”
But the announcement was quickly met by pushback from CUNA and NAFCU, which joined with the American Bankers Association (ABA), Bank Policy Institute (BPI), the Consumer Bankers Association (CBA), Independent Community Bankers of America (ICBA) and the Financial Services Forum (FSF) in issuing a joint statement the CFPB’s request for information on consumer account fees.
"The CFPB's new Request for Information on fees is a misguided effort that paints a distorted and misleading picture of our country's highly competitive financial services marketplace,” the trade groups said in a joint statement. “Multiple federal laws and the CFPB's own rules already require banks, credit unions and other providers of consumer financial services to disclose terms and fees in a clear and conspicuous manner, and our members do so each and every day. Consumers in this country know they have a wide range of choices when it comes to financial services products, and those businesses compete every day, including on fees. We look forward to responding to this Request for Information with facts and perspective sadly lacking from today's announcement."
In making its announcement, the Bureau said it is now seeking public input to help shape its rulemaking and guidance agenda, as well as its enforcement priorities in the coming months and years.
“Many financial institutions obscure the true price of their services by luring customers with enticing offers and then charging excessive junk fees,” said CFPB Director Rohit Chopra. “By promoting competition and ridding the market of illegal practices, we hope to save Americans billions.”
According to the Bureau, companies across the U.S. economy are increasingly charging inflated and back-end fees to households and families.
“This new ‘fee economy’ distorts our free market system by concealing the true price of products from the competitive process,” the Bureau stated. “For example, hotels and concert venues advertise rates, only to add ‘resort fees’ and ‘service fees’ after the fact. And fees purportedly charged to cover individual expenses, like paperwork processing, can often greatly exceed the actual cost of that service.”
What the Research Has Found
The CFPB said its research has found several areas where back-end fees might obscure the true cost of a product and undermine a competitive market, including:
- In 2019, the major credit card companies charged over $14 billion each year in punitive late fees.
- In 2019, bank revenue from overdraft and non-sufficient funds (NSF) fees surpassed $15 billion.
The CFPB said it “will strive to strengthen competition in consumer finance by using its authorities to reduce these kinds of junk fees. To craft rules, issue industry guidance, and focus supervision and enforcement resources to achieve this goal, the CFPB is seeking input from the public. Public comments provide valuable insights that allow the CFPB to target the most pressing needs and concerns, including uncovering potential illegal practices or fees.”
Feedback Sought
The CFPB said it is interested in hearing about people’s experiences with fees associated with their bank, credit union, prepaid or credit card account, mortgage, loan, or payment transfers, including:
- Fees for things people believed were covered by the baseline price of a product or service
- Unexpected fees for a product or service
- Fees that seemed too high for the purported service
- Fees where it was unclear why they were charged
The CFPB added it is also interested in hearing from small business owners, non-profit organizations, legal aid attorneys, academics and researchers, state and local government officials, and financial institutions, including small banks and credit unions.
'Sensing a Pattern'
“Every month CFPB makes a new allegation that consumers are being taken advantage of," said John McKechnie, senior partner in the Washington advocacy firm Total Spectrum. "I’m sensing a pattern. Maybe Director Chopra actually meant what he has said during his entire public career that he intends to be a very tough cop on the financial regulatory beat. Imagine that."