The Consumer Financial Protection Bureau (CFPB) has published a special edition of its Supervisory Highlights report, detailing illegal junk fees in deposit accounts and loan servicing markets, including those for mortgages, student loans, and payday lending. The CFPB’s examination and supervision program helps identify illegal practices that harm families, businesses, and market competition. The report details practices that are corroding family finances, increasing banking and borrowing costs, and impacting even financially savvy consumers.
The report highlights that for years, junk fees have been creeping across the economy, but the CFPB continues to root out these fees from consumer financial markets. The report outlines various unlawful practices related to junk fees that have been identified by the CFPB in the financial services industry, as stated by Director Rohit Chopra of the CFPB.
As a result of its earlier supervisory activities, the CFPB provided guidance in October 2022 regarding the matter of unexpected overdraft fees. Overdraft fees have been eliminated at least for 20 of the largest banks in the US, which hold 62% of the volume of consumer deposits supervised by the CFPB. Moreover, around 170,000 account holders who were charged unexpected overdraft fees will receive refunds amounting to approximately $30 million from the banks investigated by the CFPB.
The most recent issue of the Supervisory Highlights report details instances of illicit junk fees detected by the CFPB between July 1, 2022, and February 1, 2023, in different areas such as bank account deposits, payday lending, and auto loan, student loan, and mortgage loan servicing.
The CFPB has uncovered various conventional and modern techniques employed by mortgage servicers to impose unlawful fees on homeowners. The examiners found that servicers charged excessive late fee amounts, fees for unnecessary property inspections, and fake Private Mortgage Insurance (PMI) premium charges. Additionally, some servicers failed to waive fees for homeowners entering some loss mitigation options, which should have been waived under certain circumstances.
The CFPB’s examination and supervision program helps to promote transparency and stop potentially unlawful practices. The agency also works to educate families, advocacy groups, and other law enforcement agencies about these practices. The CFPB is committed to identifying and eradicating illegal junk fees across the financial services sector to ensure families are protected and have fair access to financial products and services.