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CFPB Doubles Down on Payment Transaction Fee Enforcement

The bureau has issued a circular and compliance bulletin on “junk fee” practices it says are “likely unfair and unlawful under existing law,” adding to its regulation by enforcement strategy for financial services companies.

10/26/2022 3:15 P.M.

2.5 minute read

The Consumer Financial Protection Bureau continues its regulation of so-called “junk fees” in a new Consumer Financial Protection Circular and compliance bulletin.

The White House quickly followed the bureau’s announcement with a blog post outlining why these fees are a concern and citing President Joe Biden’s “initiative on junk fees and related pricing practices.”

The bureau’s guidance centers on two “junk fee processes that are likely unfair and unlawful under existing law,” according to a news release.

First, the bureau outlines its guidance on “surprise overdraft fees” in which consumers have enough money in their bank account to cover a charge at the time their bank authorized it, but still incur an overdraft fee.

Second, the bureau explains the risks of “surprise depositor fees” sometimes charged to a consumer when a check they deposit bounces.

It says that both fees “likely” violate the Consumer Financial Protection Act.

“Today’s Consumer Financial Protection Circular on surprise overdraft fees and its bulletin on surprise deposited item fees are just the latest announcements as part of the CFPB’s junk fee initiative, one of many efforts across the federal government to increase competition and reduce unnecessary financial burdens on American families,” the bureau states in the news release.

The bureau’s overall initiative on “junk fees” started in January 2022 when it sought comment on the issue. In June, the bureau released an advisory opinion taking aim at debt collectors’ use of payment transaction fees, drawing continued concerns from ACA International about the CFPB’s regulatory processes and lack of stakeholder involvement in those processes, ACA previously reported.

White House Action Plans

In response to a call to action from the Biden administration, federal agencies are researching ways to reduce “junk fees,” and the blog post outlined several of the CFPB’s initiatives and guidance it has issued.

The CFPB is creating rules and guidance on other fees charged by banks and credit card companies.

The Federal Trade Commission recently approved an advance notice of proposed rulemaking on “junk fees.”

Specifically, the FTC will “initiate a rulemaking proceeding addressing junk fees that are charged for goods or services that have little or no added value to the consumer. The ANPR seeks comment on the prevalence of junk fees and the consumer harms arising from junk fee practices, among other questions,” ACA previously reported.

The FTC will seek comments on:

  • Unnecessary charges for “worthless, free, or fake products or services.”
  • Unavoidable charges “imposed on captive consumers.”
  • Surprise charges that secretly push up the purchase price

ACA’s Take

The trend of the Biden administration, the CFPB and FTC targeting certain fees will continue and ACA will be monitoring this activity in terms of how it could impact the accounts receivable management industry.

If you have executive leadership updates or other member news to share with ACA, contact our communications department at [email protected]. View our publications page for more information and our news submission guidelines here.

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