Global: CFPB Targets Large Banks Over Customer ‘Junk Fees’

The Consumer Financial Protection Bureau (CFPB) is issuing a stern warning to major American banks regarding the practice of imposing what they term “junk fees” for fundamental customer services, such as providing account information.

This advisory opinion is part of a broader nationwide effort to clamp down on these “junk fees,” with the backing of the White House. The issue is rooted in a 2010 federal law stipulating that large banks and credit unions must furnish comprehensive and precise account information upon request from account holders.

The CFPB has identified through its market monitoring and public feedback that some providers are charging customers for essential information, crucial for resolving account-related issues and managing their financial affairs.

Among the so-called junk fees identified are charges for sending paper statements, including those never physically printed or mailed, valueless add-on products linked to fully paid-off auto loans, and unreliable international money transfers.

In response to these findings, the CFPB is compelling the offending firms to reimburse a total of $140 million to consumers. Of this sum, $120 million is earmarked for refunds covering unexpected overdraft fees and dual non-sufficient funds charges.

Furthermore, the CFPB is in the process of proposing a rule that, upon finalization, would oblige financial institutions to allow customers to safely, securely, and reliably share their banking transaction data with other companies and banks.

The aim of this proposal is to simplify the process for people to transition from their current bank to institutions with better offerings, all while managing accounts from multiple service providers, as outlined by the White House.

Director of the CFPB, Rohit Chopra, has stated: “While smaller relationship banks prioritize top-notch customer service, many major banks create cumbersome hurdles and impose unnecessary fees to answer basic inquiries. Although the largest banks have moved away from the relationship banking model, federal law still mandates that they respond to specific customer queries in a thorough, accurate, and timely manner.”