This week, the Consumer Financial Protection Bureau (CFPB) released a special edition of its Supervisory Highlights focused on the agency’s efforts to protect consumers from illegal junk fees. The junk fees discussed in the report – including fees for fake paper statements and worthless add-on products for auto loans – can strain the financial stability of even the most financially savvy families.
As a result of the CFPB’s supervisory work, the companies in today’s report are refunding $140 million to consumers, $120 million of which is for surprise overdraft fees and double-dipping on non-sufficient funds fees. A separate report today finds that most financial institutions have eliminated non-sufficient funds fees, saving consumers an estimated $2 billion every year.
“The CFPB continues to uncover junk fee scams that violate the law and undermine consumer trust,” said CFPB Director Rohit Chopra. “We will continue to combat the illegal fees cropping up in consumer finance markets.”
This Supervisory Highlights special edition covers junk fees in the areas of bank account deposits, auto loan servicing, and remittances found during examinations between February and August 2023. CFPB oversight has identified instances of companies charging a variety of junk fees, including for:
Additionally, CFPB examiners found how service providers contribute to many banks’ illegal fee practices. These companies provide critical deposit, payment, and data processing services to many banks’ operation systems. Those operation systems have contributed to banks’ double-dipping on non-sufficient funds fees on a single transaction. The CFPB directed these service providers to stop supporting banks’ ability violate the law.
When CFPB examiners uncover problems, they share their findings with companies to help them remediate violations. Typically, as with many of the instances identified within today’s report, companies take actions to fix the identified problems. For more serious violations or when companies fail to take corrective actions, the CFPB opens investigations for potential enforcement actions. Read the Special Edition of Supervisory Highlights.
Non-sufficient funds fees report
The CFPB has enhanced its supervision and enforcement scrutiny of banks that are heavily dependent on fees. Over the past several years, more financial institutions have voluntarily moved away from charging non-sufficient funds fees. In a data spotlight published today, the CFPB found that the vast majority of reported NSF fee revenue has been eliminated. The policy changes among financial institutions that led to this change are expected to save consumers $2 billion annually.
Learn more about the CFPB’s work on junk fees.
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Using the above phone number and email address, you can gain access to a knowledgeable team that’s ready to address all your credit union’s compliance inquiries — promptly and efficiently. With the Compliance Hotline, you can proactively respond to impromptu questions and issues by getting clarity and insight on technical topics that normally slow you down. We want to help you unlock the full potential of your League membership by leveraging the resources and support you need to navigate the complex world of compliance effortlessly. We’re ALWAYS just a phone call or email away!
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For more information, email Lisa Quaranta.
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