WASHINGTON, Oct 27 — The US Consumer Financial Protection Bureau on Wednesday issued guidance that surprise overdraft fees and unexpected depositor fees for bounced checks are likely unfair and unlawful practices, in a move the White House said could eliminate billions in banking fees.
“These are junk fees. They’re unfair and they hit marginalized Americans the hardest, especially low income folks and people of color,” President Joe Biden told a press conference. “They benefit big corporations. Not consumers. Not working families. And that changes now.”
Overdraft fees can catch consumers off guard when they don’t reasonably expect their actions to incur a fee, while charging a fee to a depositor of a bounced check penalises someone who might not be aware of a bad check, the CFPB said.
The agency said that both fees likely violate the Consumer Financial Protection Act’s prohibition on unfair fees that are unavoidable to consumers.
In a fact sheet, the White House noted that bank overdraft and non-sufficient funds fees accounted for an estimated US$15.5 billion (RM73 billion) in revenue for banks in 2019.
“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 in a statement.
“We are providing guidance on existing law that will help law-abiding businesses seeking to fairly compete and the families they serve.”
Biden added that the Federal Trade Commission had started work on a rule last week to crack down on “unfair and deceptive fees across all industries.” He cited processing fees for concert tickets and resort fees at hotels as two items his administration is examining.
“We’re just getting started. There’s tens of billions of dollars and other junk fees across the economy that I’m directing my administration to reduce or eliminate,” Biden said.
His remarks follow a meeting the White House Competition Council held last month, in which he ordered federal agencies to take steps to reduce or eliminate hidden fees, charges and add-on costs, which he said were weighing on family budgets. — Reuters
