CFPB Wants Your Input on 'Junk Fees'

Which do you despise the most? Late payment fees? Hotel resort fees? Document preparation fees? Convenience fees? They all fall under the general category of "junk fees," something about which the Consumer Financial Protection Bureau (CPFB) has grown increasingly concerned.

The agency is seeking comments from the public related to what it calls the "fee economy." According to the CFPB, "Exploitative junk fees charged by banks and non-bank financial institutions have become widespread, with the potential effect of shielding substantial portions of the true price of consumer financial products and services from competition."

Taking Action to Increase Fee Transparency

Behind the request for public comments is the knowledge that a consumer's ability to compare prices depends on transparency. When companies tack on fees, often hidden until the bill is presented, comparison shopping becomes much more difficult.

The CFPB refers to this as the "fee economy," a practice that can give companies the power to overcharge since consumers have no say once they've made a decision to purchase the product or service.

Further, the agency notes that the Consumer Financial Protection Act (CPFA) directs the CFPB to enforce consumer law to ensure financial markets are fair, transparent, and competitive—something the CFPB believes is undermined by junk fees.

March 31, 2022 Submission Deadline

The public has through March 31, 2022, to submit comments electronically, by email, or via regular mail, though the CPFB discourages the latter route due to COVID restrictions and potential delays.

Your comments should identify Docket No. CFPB-2022-0003 and be submitted by any of the following:

• Electronic: http://www.regulations.gov. Follow the instructions for submitting comments.
• Email: FederalRegisterComments@cfpb.gov. Include Docket No. CFPB-2022-0003 in the subject line of the message.
• Mail/Hand Delivery/Courier: Addressed to—Comment Intake —Fee Assessment, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552.

Special Instructions

If you plan to submit comments, the CFPB offers the following guidelines to make sure your voice is heard:

• Submit your comments early. Don't wait until the deadline.
• Include both the document title (Request for Information Regarding Fees Imposed by Providers of Consumer Financial Products or Services) and the docket number (CFPB-2022-0003).
• Submit your comments electronically to avoid COVID-related delays.
• Comments will be posted and available for viewing to https://www.regulations.gov.
• Comments will also be available for public inspection and copying at 1700 G Street NW, Washington, DC 20552, once the CPFB HQ reopens.
• All comments are subject to public disclosure as part of the public record and will be posted without change.

Examples of Junk Fees

Junk fees can be hidden in almost any financial transaction or type of account. Some of the most common, according to the CFPB, include:

Deposit Account Fees

Banks and other financial institutions include a number of fees in deposit accounts. Names vary but some of the most common are account maintenance fees, minimum balance fees, savings transfer fees, non-sufficient funds (NSF) fees, overdraft fees, and ATM fees.

Credit Card Fees

According to CFPB, credit card fees make up about 20% of the total cost of having a credit card. The most common, late fees, are regulated by law at a maximum of $30 for the first late payment and $41 for subsequent late payments. Nearly all banks, CFPB says, charge the maximum.

Remittance and Payment Fees

These include such fees as payment transfer fees, convenience fees, return item fees, stop payment fees, check image fees, online or telephone payment fees. Also on the list, ACH transfer fees and wire transfer fees.

Prepaid Account Fees

Prepaid credit and debit cards appeal to unbanked consumers, often people with limited resources. This, however, doesn't stop fees from being levied, including transaction fees, cash reload fees, balance-inquiry fees, inactivity fees, monthly service fees, and card cancellation fees.

Mortgage Fees

Mortgages, the closing process specifically, contain a significant number of fees not all homebuyers (or sellers) know about. There are application fees, monthly property inspection fees for some, title insurance, along with a whole host of other closing fees including a hefty appraisal fee. Some of these fees apply to the buyer, some to the seller. Nobody, it seems, is spared.

Other Loan Fees

The CFPB also wants to hear about loan-related fees such as loan origination and loan servicing fees, including for student loans, auto loans, installment loans, payday loans, and other types of loans.

Questions to Ponder

As part of the comment process, the CFPB suggests commenters consider their answers to the following questions:

1. What has been your experience with fees associated with your bank, credit union, prepaid or credit card account, credit card, mortgage, loan, or payment transfers?
2. What types of fees obscure the true cost of the product or service by not being built into the upfront price?
3. What fees exceed the cost to the business that the fee purports to cover?
4. What companies or markets are obtaining significant revenue from back-end fees, or costs that are not part of the sticker price?
5. What obstacles, if any, are there to building fees into up-front prices?
6. Do consumers consider back-end fees, both inside and outside of financial services?
7. Do consumers understand fee structures disclosed in fine-print or boilerplate contracts?
8. Do consumers make decisions based on fees, even if well disclosed and understood?
9. What oversight and/or policy tools should the CFPB use to address the escalation of excessive fees or fees that shift revenue away from the front-end price?