The consumer watchdog’s new guidance aims to end ‘junk fees’ at banks | Techy Kings


Rohit Chopra, director of the Consumer Financial Protection Bureau, testified during a Senate Banking, Housing and Urban Affairs Committee hearing on April 26, 2022.

Tom Williams | Cq-roll Call, Inc. | Getty Images

The country’s consumer watchdog is stepping up its efforts to curb so-called junk fees charged by some banks to consumers.

The Consumer Financial Protection Bureau on Wednesday said it issued guidance to end two specific bank fees that could surprise customers — and are “potentially unfair and illegal,” according to a release from the agency. The move is the latest in the CFPB’s ongoing initiative to scrutinize junk fees, which are typically unexpected or excessive fees.

More from Personal Finance:
How households prepare for a possible recession
These colleges promise zero student loans
Here’s a breakdown of the latest inflation — in one chart

“Americans are willing to pay for legitimate services at competitive prices, but are frustrated when they are charged junk fees for unexpected or unwanted services that have no value to them,” said CFPB Director Rohit Chopra.

During a press briefing Wednesday morning, President Joe Biden said the administration’s crackdown on junk fees — including from banks as well as hotels, airlines and other entities — would “immediately begin to save the American people collectively billions of dollars in unfair fees” and hold companies accountable. .

“My administration also explained that sudden overdraft payments are illegal,” he said.

In a statement, American Bankers Association President and CEO Rob Nichols said the move “attempts to sensationalize high regulatory fees that are already clearly disclosed to customers under existing federal regulations.”

CFPB targets surprise overdraft and depositor fees

Still, the new guidance first targets surprise overdraft fees, which can be as high as $36 each, the CFPB said. This fee can occur when a customer has enough money in their account to cover a debit charge at the time the bank authorizes it, but is later charged an overdraft fee due to the timing of another charge hitting their account.

The second fee the CFPB addresses can occur when a customer deposits a check that ends up bouncing — even if the overdraft is due to insufficient funds of the check writer. Charges are typically $10 to $19 per instance, according to the CFPB.

This year, many banks have eliminated overdraft and insufficient fund fees or made their policies more user-friendly. The CFPB estimates the changes translate to $3 billion in savings for consumers.

— CNBC reporter Emma Kinery contributed to this story.

The CFPB wants buy now, pay later companies to regulate like credit card companies


Source link