The Consumer Financial Protection Bureau on Wednesday signaled a broad crackdown on hidden and excessive fees charged by banks, mortgage lenders and other financial entities.
The federal agency, created in the wake of the 2008 financial crisis, is seeking consumers’ input on so-called junk fees associated with their bank, credit union, prepaid or credit card account, mortgage, loan or payment transfers.
Such experiences related to a product or service include: Fees people thought were covered by its baseline price; unexpected fees; fees that seemed too high; and fees where it was unclear why they were charged, according to the agency’s announcement Wednesday.
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There’s been an “explosion” in junk fees, such as overdraft fees charged by banks, late fees levied by credit-card companies, and closing fees when buying a home, CFPB Director Rohit Chopra said during a press call Wednesday morning.
“In many cases, junk fees act like penalties” instead of compensation for a legitimate service, according to Chopra, who was appointed by President Joe Biden. They also make it difficult for consumers to choose a product or service since they’re unaware of its true cost upfront, Chopra said.
The CFPB will use public comments to target new rules, issue guidance to firms, and focus its supervisory and enforcement resources, the agency said. The comment period ends March 31.
