CFPB Launches Initiative on Excessive Junk Fees

The Consumer Financial Protection Bureau (CFPB) recently announced that it had launched an initiative to save households billions of dollars a year by reducing “exploitive junk fees,” such as overdraft/NSF fees, charged by financial institutions.

The CFPB found several areas where back-end fees obscure the true cost of a product or service, which undermines a competitive market, and addresses these areas in their recently filed Request for Information Regarding Fees Imposed by Providers of Consumer Financial Products or Services (Request for Information).

The CFPB has grown increasingly concerned that exploitive junk fees charged by financial institutions have become widespread with the potential effect of obscuring the true cost of a product. The CFPB found several areas where back-end fees, such as overdraft and nonsufficient fund fees, were found to be excessive. The CFPB addresses these fees and more in their Request for Information.

Credit unions should consider reviewing their fees for products and services to determine if any fees are considered “junk fees.” In the event the CFPB uses its rulemaking authority to limit fees, credit unions may want to be prepared to change their fee structure for the “junk fees” identified.

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