Feds Target ‘Junk’ Bank Fees

Overdraft fees, resort fees, service fees and other ill-defined charges are in the sights of the Consumer Financial Protection Bureau (CFPB). It’s putting together a set of rules aimed at eliminating or reducing fees that don’t reflect the actual cost of providing a service – “junk fees,” in other words.

“Many financial institutions obscure the true price of their services by luring customers with enticing offers and then charging excessive junk fees,” said CFPB Director Rohit Chopra in a news release. “By promoting competition and ridding the market of illegal practices, we hope to save Americans billions.”

Companies across the U.S. economy are increasingly charging inflated and back-end fees to households and families, the CFPB said, charging that the new “fee economy” distorts the 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.

What do you think?

The agency wants to craft rules that will reduce junk fees. It’s asking for input from the public to help it identify the most pressing needs and concerns, including potential illegal practices or fees.

The CFPB said it is interested in hearing about people’s experiences with fees associated with their bank, credit union, prepaid or credit card account, mortgage, loan, or payment transfers, including:

  • Fees for things people believed were covered by the baseline price of a product or service.
  • Unexpected fees for a product or service.
  • Fees that seemed too high for the purported service.
  • Fees where it was unclear why they were charged.

Submit your comments

Have some ideas about excessive fees? Submit them by March 31, 2022 via email to: FederalRegisterComments@cfpb.gov and include Docket No. CFPB-2022-000 in the subject line.