Most of the CFPB attacks bank fees through legal documents | So Good News

On October 26, 2022, President Biden appeared at the White House with Rohit Chopra, Director of the CFPB, and Lina Khan, Chair of the FTC, to announce that the Administration is taking steps to eliminate “unnecessary fees,” such as fees for bounced checks. unpaid refunds, surprise bank fees, hidden hotel booking fees and parking fees to prevent changing cable plans. The President said (1) His administration is creating a check deposit fee that increases with an overdraft fee (APSN) that is allowed to be good but later becomes “illegal” to save consumers more than $1 billion each. year, (2) the CFPB is developing rules and regulations that will reduce credit card late fees that cost credit card holders $24 billion each year, and (3) his Administration has encouraged banks to reduce the fees they charge consumers worldwide. and that the CFPB is developing rules that would require banks to step up in dealing with more types of financial fraud. The White House also published a blog post about the president’s actions on interest rates.

At the meeting, Director Chopra announced that the CFPB has just issued new guidelines (described below) regarding two bank financial practices that “may be unfair and illegal under existing laws.” The CFPB’s guidance relies on the UDAAP’s unfair provisions, which prohibit actions or practices that (1) cause or are likely to cause substantial harm to consumers; (2) the injury cannot be avoided by the consumer; and (3) the injury is not outweighed by the benefit against consumers or competitors.

CFPB Circular 2022-06 addresses the practice of charging “surprise surprise fees” for ASPN transactions. The CFPB stated that these fees are unfair because they are not reasonably expected by consumers, would cause serious harm that cannot be avoided, and do not exceed the net benefit to consumers or competition. The CFPB cited guidance from the Federal Reserve and the FDIC as well as its recent approval regarding ASPN fees. The CFPB notes that these costs are “unpredictable” because financial institutions use policies to evaluate risk factors that are “not understood by most consumers and that are beyond the control of consumers,” such as settlement time, delivery of goods, availability of funds, and costs used for risk factors. The CFPB stated: “Some actions by financial institutions may increase the risk of unexpected financial losses from APSN products by assessing overdraft fees in excess of the account’s overdraft limit. In these APSN situations, financial institutions assess overdraft fees at the time of payment based on the number of consumers. which is reduced by the debit hold, rather than the consumer’s balance, which results in consumers being tempted to make multiple overdraft charges when they expect only one.” to consumers that additional fees apply to APSN transactions.

CFPB Compliance Bulletin 2022-06 also addresses the practice of charging fees for returned products. The CFPB stated that “[b]the policy of charging the Customer Returns for all returned products regardless of the condition or behavior in the account may be unfair…. ” The CFPB’s analysis focuses on the consumer’s lack of awareness and control over whether the check will be returned unpaid. The CFPB said that these funds can be issued if “bank policies and procedures are well designed to solve the problem, do not harm consumers in other ways, reduce the loss of deposits that can be given to consumers, encourage consumers. integrity of banks by preventing losses, and, if fraud , it prevents practices that violate federal law as contained in statute and common law.” Although the CFPB stated that the fee would be applicable to consumers who (a) deposit bad checks repeatedly from the same originator or (b) deposit unsigned checks, the CFPB ignores the impossibility of this method because it requires manual processing of returned checks.

As previously noted, the CFPB continues to avoid promulgating transparent regulations through the use of notice and comment procedures. Instead, the CFPB is relying on these policy statements to indicate what “could” be considered a UDAAP under the CFPA. By issuing these rulings, which the CFPB has said “does not impose legal requirements on foreign parties,” along with previous blog posts, multiple overdraft studies, and monitoring practices, the CFPB has made it difficult for banks that want to comply. rules provided to identify reasonable requirements. As a result, in order to avoid regulatory scrutiny and reduce risk, banks should review their charging policies as they relate to overdraft fees for APSN, fees for checks that are kept and returned unpaid, and other fees that may later be called “non-performing fees.”