The Consumer Financial Protection Bureau said Wednesday that it’s opening a wide-ranging inquiry into what it calls “exploitative junk fees” charged by banks and financial companies. The initiative will probe late fees, overdraft fees, payment processing fees, stop payment fees, check imaging fees, mortgage closing costs, and credit card balance transfer fees. It will focus on fees that might hide the true cost of a financial product or that might be more expensive than what the service is really worth. Bureau officials said they were encouraged by their recent success in getting banks to curtail overdraft fees charged to customers who overdraw their checking accounts. A number of the country’s biggest banks have said they are cutting back their overdraft and bounced check fees after the CFPB said in December it would be scrutinizing banks that relied heavily on them. “That experience shows that these kinds of junk fees are not a necessity, and are not inevitable,” a senior bureau official said at an online press conference. “Change is possible, and we hope to see more of that.” Groups representing banks and credit unions pushed back against the bureau’s initiative in a joint statement Wednesday, arguing that laws already require financial companies to clearly disclose terms and fees to their customers. “The CFPB’s new Request for Information on fees is a misguided effort that paints a distorted and misleading picture of our country’s highly competitive financial services marketplace,” the groups said. “We look forward to responding to this Request for Information with facts and perspective sadly lacking from today’s announcement." The bureau’s initiative to reduce junk fees, which likely will go on for years, will include issuing industry guidelines, crafting rules, and stepping up supervisory and enforcement efforts, officials said. Rohit Chopra, the bureau’s director, singled out overdraft fees and credit card fees as egregious examples of junk fees, and said homebuyers feel “gouged” with closing costs. Together, he estimated that Americans pay tens of billions of dollars a year in such fees. Members of the public have until March 31 to weigh in on the effort by emailing FederalRegisterComments@cfpb.gov. The bureau is interested in hearing about fees associated with banks, credit unions, prepaid and credit cards, mortgages, loans, and payment transfers. It especially wants to know about fees customers thought were covered by the basic cost of a service, unexpected or unclear fees, or fees that seemed too high for the service provided. Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com.
