In a recent blog post and in recent training we pointed out the financial institution regulatory agencies attack on overdraft fees. Now the attack is being broadened.
On January 26, 2022, the Consumer Financial Protection Bureau (CFPB) issued a request for public comment on the topic of Fees Imposed by Providers of Consumer Financial Products or Services. Comments will be accepted until March 31, 2022.
The request is a chance for the public to share input that will help shape the agency’s rulemaking and guidance agenda, as well as its enforcement priorities in the coming months and years.
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. 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.
The CFPB’s research has found several areas where back-end fees might obscure the true cost of a product and undermine a competitive market:
- 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 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.