The Consumer Financial Protection Bureau (CFPB) issued guidance on “junk fees” this week that raise several concerns over the treatment of financial institution fees. The CFPB states overdraft and depositor fees likely violate the Consumer Financial Protection Act prohibition on unfair practices when consumers cannot reasonably avoid them.
The White House issued a statement in conjunction with the CFPB’s guidance calling on “all agencies to reduce or eliminate hidden fees, charges, and add-ons for everything from banking services to cable and internet bills to airline and concert tickets.”
“Credit unions are the original consumer protectors, but we have strong concerns about the White House and CFPB’s classification of certain financial services fees as ‘junk fees.’ Credit unions offer these services as a member accommodation and benefit and design their programs to meet the needs of their individual memberships,” said CUNA President/CEO Jim Nussle. “Credit unions have a strong history of working with members to solve issues and the CFPB’s guidance creates new expectations without the benefit of a comment period or stakeholder feedback.”
President Joe Biden said during his remarks the administration is making clear “surprise overdraft fees” are illegal.
“While president Biden thinks overdraft fees are criminal - 130 million credit union members view this service as an essential lifeline that helps keep them out of the grips of unregulated, predatory providers that charge exponentially higher prices for similar services,” Nussle added.
CUNA has pushed back against the CFPB’s broad classification of many financial services fees as “junk fees,” including in recent letters to Congress.