The nation’s consumer watchdog is upping its efforts to clamp down on so-called junk fees that some banks charge consumers.
The Consumer Financial Protection Bureau on Wednesday said it issued guidance to end two particular bank fees that can catch customers by surprise — and are “likely unfair and unlawful,” according to the agency’s release. The move is the latest in the CFPB’s ongoing initiative to scrutinize junk fees, which generally are fees that are unexpected or excessive.
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“Americans are willing to pay for legitimate services at a competitive price, but are frustrated when they are hit with 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 actions on junk fees — including those from banks as well as hotels, airlines and other entities — would “immediately start saving Americans collectively billions of dollars in unfair fees” and hold corporations accountable.
“My administration is also making it clear surprise overdraft fees are illegal,” he said.
In a statement, American Bankers Association President and CEO Rob Nichols said the action “attempts to sensationalize highly regulated fees that are already clearly disclosed to customers under existing federal rules.”
CFPB targets surprise overdraft and depositor fees
Nevertheless, the new guidance first targets surprise overdraft fees, which can be as much as $36 each, the CFPB said. These fees can happen when a customer had enough money in their account to cover a debit charge at the time the bank authorized it, but then is charged an overdraft fee due to the timing of other charges hitting their account.
The second fee the CFPB addresses can happen when a customer deposits a check that ends up bouncing — despite the overdraft being due to the check writer’s insufficient funds. The charge is typically $10 to $19 per instance, according to the CFPB.
Already this year, many banks have been eliminating overdraft and non-sufficient funds fees or making their policies more consumer-friendly. The CFPB estimates those changes translate into $3 billion in savings for consumers.
— CNBC reporter Emma Kinery contributed to this story.