Better Markets filed a comment letter in response to the Consumer Financial Protection Bureau’s request for information on the impact of junk fees on consumers.
Why It Matters. According to the CFPB, banks assessed more than $15 billion in overdraft fees and non-sufficient funds fees on consumer accounts and credit card issuers charged consumers more than $23 billion in fees in 2019. While technology continues to lower the costs of providing many of these consumer financial products and services, many of these cost savings are not being passed on to the consumer in the form of lower fees. Collectively, these excessive and exploitative fees exact a huge price on consumers each year.
What We Said. While fees can serve an important function by enabling bank and non-bank financial institutions to offer an array of financial products and services to their customers, these fees should not be excessive or exploitative. Unfortunately, many fees, especially those associated with overdraft and credit card products, are excessive compared to the actual costs to the financial institution of providing the product or service. In addition, those fees are often exploitative due to the captive nature of the banking relationship. The CFPB has the legal authority to regulate these excessive and exploitative fees and it should take action where necessary to protect consumers. The CFPB should address abusive fees by prescribing stronger disclosure requirements; regulating hidden fees (including discriminatory fees) as unfair, deceptive, and abusive acts or practices; and banning or limiting acts or practices that result in excessive and exploitive fees.
Bottom Line. Better Markets supports the CFPB for undertaking a close examination of junk fees with an eye toward possible reforms that may be necessary to further protect consumers from predatory financial products and services.
Read our full Comment Letter here.