On January 26, the Consumer Financial Protection Bureau (CFPB or Bureau) announcement its asking the public to share its feedback on the “abusive junk fees charged by banks and financial firms” to form its rulemaking and guidance agenda, as well as its enforcement priorities. The CFPB press release included a link to its “Request for Information Regarding Fees Charged by Providers of Consumer Financial Products or Services” (Request for Information).
The press release stated that “fee economics” distorts our free market system by obscuring the true price of products from the competitive process,” while the CFPB shared its concern over inflated fees that far outweigh the true cost of services. and back end. charges billed afterwards.
The CFPB noted that in 2019, major credit card companies charged more than $14 billion in late fees and bank revenue from overdraft and insufficient funds (NSF) fees exceeded $15 million. dollars. The press release states that these fees can distort the true cost of a product and harm competition.
The CFPB has clarified that it intends to strengthen competition by reducing undesirable fees and craft rules, industry guidance and focusing on its enforcement authorities. Specifically, the CFPB asked about the public’s experiences with fees associated with their bank, credit union, prepaid account or credit card, mortgage, loan or payment transfer regarding:
- Charges for things that are supposed to be covered by the base price of a product or service;
- unexpected charges for a product or service;
- Fees that seem too high for the service; and
- Charges where it was unclear why they were charged.
Our catch. The CFPB’s request for information linked to its press release indicates that the CFPB may attempt to use its authority over Unfair, Deceptive, or Abusive Acts and Practices (UDAAP) as a means of taking enforcement action against banks. and processors that process payments for entities that do not fully disclose all costs a consumer may incur before purchasing a good or service from the entity. Overdraft fees and the merchant processor’s alleged complicity with companies believed to be in violation of consumer financial protection laws were significant issues for the CFPB while Rohit Chopra served as Deputy Director of the CFPB under Richard Cordray, and it appears that the Director Chopra wants to pick up where the Bureau left off. extinct several years ago. Indeed, some of the CFPB’s past enforcement actions regarding the UDAAP focused on the alleged failure of a merchant or financial institution to disclose certain consumer costs. The CFPB’s focus on “junk fees” should be seen as the Board exercising similar authority on the same continuum. Banks and processors must continue to be vigilant in reviewing merchant advertising to ensure the costs of goods and services are disclosed.