WASHINGTON, D.C.—Legal Director and Securities Specialist Stephen Hall issued the following statement on the filing of Better Markets’ Comment Letter to the Consumer Financial Protection Bureau (CFPB) in response to the agency’s request for information on junk fees:
“Every year, bank and non-bank financial institutions charge tens of billions of dollars in fees to consumers. While these fees can serve important functions in the market to enable financial institutions to offer an array of consumer products and services, they should not be used as tools for unfairly extracting wealth from consumers, especially those who are low- and middle-income. These fees should be reasonable and proportionate to the costs of offering the product or service; they should not be excessive and exploitative for the sake of padding a company’s bottom-line.
“Despite technological advances and the rise of automation in financial services that have lowered the costs of providing services and products to their customers, many financial institutions have not passed along those cost-savings to consumers or have cleverly disguised their products and services to rack up exorbitant fees at the expense of their customers. We applaud 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.
“The Dodd-Frank Act gave the CFPB broad legal authority to regulate consumer financial products and services, including the fees associated with them. In our comment letter, we urge the CFPB to use this authority to address junk 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. In formulating our letter, we benefited greatly from the valuable input we received from Democracy Forward, an organization also focused on these important reforms.”
Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.