Which do you despise the most? Late fee ? Hotel resort fees? Document preparation costs? Convenience fee? They all fall under the general category of “unwanted fees”, which is of growing concern to the Consumer Financial Protection Bureau (CPFB).
The agency is seeking public comment on what it calls “fee economy.” According to the CFPB, “abusive junk fees charged by banks and non-bank financial institutions have become widespread, with the potential effect of shielding substantial parts of the real price of consumer financial products and services from competition.”
Key points to remember
- The CFPB is seeking public comment on so-called junk fees that tend to raise the price of goods and services, often without the knowledge of consumers.
- The CFPB recommends submitting comments electronically or by email.
- All comments will be posted online unchanged.
- The CFPB asks for help in identifying unwanted fees to ensure markets are fair, transparent and competitive.
- Consumers have until March 31, 2022 to post or submit their comments.
Take steps to increase fee transparency
Behind the request for public comment is the knowledge that a consumer’s ability to compare prices depends on transparency. When companies tackle fees, which are often hidden until the bill is presented, comparison shopping becomes much more difficult.
The CFPB calls this “fee economics,” a practice that can give companies the power to overcharge since consumers have no say in it once they make the decision to buy the product or service.
Additionally, the agency notes that the Consumer Financial Protection Act (CPFA) directs the CFPB to enforce consumer law to ensure that financial markets are fair, transparent and competitive, which the CFPB believes is undermined. by junk fees.
March 31, 2022 Deadline for submission
The public has until March 31, 2022 to submit comments electronically, by email, or by regular mail, although CPFB discourages the latter route due to COVID restrictions and potential delays.
Your comments should identify File No. CFPB-2022-0003 and be submitted by one of the following:
- Electronic: http://www.regulations.gov. Follow the instructions for submitting comments.
- E-mail: FederalRegisterComments@cfpb.gov. Include case number CFPB-2022-0003 in the subject line of the message.
- Mail / Hand delivery / Courier: Addressed to—Comments—Fee Assessment, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552.
The CFPB discourages submission of comments by hand delivery, mail or courier due to potential complications and delays related to COVID-19
If you are considering submitting comments, the CFPB offers the following guidelines to ensure your voice is heard:
- Submit your comments early. Don’t wait for the deadline.
- Include both the title of the document (Request for information regarding fees charged by providers of consumer financial products or services) and the file number (CFPB-2022-0003).
- Submit your comments electronically to avoid COVID-related delays.
- Comments will be posted and available for viewing at https://www.regulations.gov.
- Comments will also be available for public inspection and copying at 1700 G Street NW, Washington, DC 20552, once CPFB headquarters reopens.
- All comments are subject to public disclosure as part of the public record and will be posted unchanged.
Do not include proprietary information or sensitive personal information, such as account numbers, social security numbers, or other people’s names, as this information will not be altered or deleted.
Examples of unwanted charges
Unwanted fees can be hidden in almost any financial transaction or account type. 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. The names vary, but some of the most common are account maintenance fees, minimum balance fees, savings transfer fees, insufficient funds (NSF) fees, overdraft fees and ATM fees. .
Credit card fees
According to the CFPB, credit card fees represent approximately 20% of the total cost of 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. Almost all banks, says the CFPB, charge the maximum.
Remittance and payment fees
These include fees such as Payment Transfer Fee, Convenience Fee, Return Item Fee, Chargeback Fee, Check Image Fee, Online Payment Fee or by telephone. Also on the list are ACH transfer fees and wire transfer fees.
Prepaid account fees
Prepaid credit and debit cards appeal to unbanked consumers, often people with limited resources. However, this does not prevent fees from being charged, including transaction fees, cash top-up fees, balance inquiry fees, inactivity fees, monthly service fees and service fees. cancellation of card.
Mortgages, the closing process in particular, contain a significant number of fees that not all buyers (or sellers) are aware of. There are filing fees, monthly inspection fees for some, title insurance, plus a host of other closing costs, including hefty appraisal fees. Some of these fees apply to the buyer, others to the seller. No one, it seems, is spared.
Other loan fees
The CFPB is also interested in learning more about loan-related fees, such as loan origination and servicing fees, including for student loans, car loans, installment loans, payday loans and others. types of loans.
Questions to ponder
As part of the comment process, the CFPB suggests that commenters consider their responses to the following questions:
- What has been your experience with fees associated with your bank, credit union, prepaid or credit card account, credit card, mortgage, loan, or payment transfer?
- What types of fees hide the true cost of the product or service by not being included in the original price?
- What charges exceed the cost to the business that the charge is intended to cover?
- Which companies or marketplaces derive significant revenue from management fees or costs that are not part of the list price?
- What are the obstacles, if any, to incorporating fees into initial prices?
- Do consumers consider return costs, both inside and outside financial services?
- Do consumers understand fee structures disclosed in fine print or boilerplate contracts?
- Do consumers make decisions based on fees, even if they are well disclosed and understood?
- What oversight and/or policy tools should the CFPB use to deal with escalating excessive fees or fees that divert revenue from the original price?