Saying it wants to save consumers billions, the consumer bureau issued a request for Americans’ junk-fee stories – iffy charges added to any financial product.
WASHINGTON, D.C. – The U.S. Consumer Financial Protection Bureau (CFPB) launched an initiative to, it says, “save households billions of dollars a year by reducing exploitative junk fees charged by banks and financial companies.”
“Many financial institutions obscure the true price of their services by luring customers with enticing offers and then charging excessive junk fees,” says CFPB Director Rohit Chopra. “By promoting competition and ridding the market of illegal practices, we hope to save Americans billions.”
According to CFPB, more companies are charging unexpected fees as a way to remain competitive. They advertise an interest rate or charge that seems competitive compared to other firms, only to add a fee later that consumers often don’t understand. As an example, CFPB notes some line-item fees such as “paperwork processing,” “service fees” and “resort fees” often fall into the junk-fee category.
It specifically called out bank fees, saying that in 2019, major credit card companies charged over $14 billion in punitive late fees, and bank revenue from overdraft and non-sufficient funds fees surpassed $15 billion.
For now, CFPB has asked consumers to send in their junk-fee stories, including any insight into mortgage fees. Its list also includes fees associated with bank, credit union, prepaid or credit card account, loans or payment transfers. It identifies junk fees as ones that:
- Were unexpected
- That seemed too high for the purported service
- Where it’s unclear why they were charged
CFPB says it also wants to hear 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.
Once CFPB has the stories in hand, it says it will “craft rules, issue industry guidance, and focus supervision and enforcement resources” to “strengthen competition in consumer finance (and) reduce these kinds of junk fees.”
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