On January 26, 2022, the CFPB announced it launched an initiative to reduce exploitative junk fees charged by banks and financial companies. The initiative includes a request for information which seeks input from people regarding fees associated with their bank, credit union, prepaid or credit card account, mortgage, loan, or payment transfers, including:
- Fees for things people believed were covered by the baseline price of a product or service
- Unexpected fees for a product or service
- Fees that seemed too high for the purported service
- Fees where it was unclear why they were charged
The CFPB is also interested in hearing from small business owners, non-profit organizations, legal aid attorneys, academics and researchers, state and local government officials, and financial institutions, including small banks and credit unions.
According to the CFPB, Companies across the U.S. economy are increasingly charging inflated and back-end fees to households and families. This new “fee economy” distorts our free market system by concealing the true price of products from the competitive process. For example, hotels and concert venues advertise rates, only to add “resort fees” and “service fees” after the fact. And fees purportedly charged to cover individual expenses, like paperwork processing, can often greatly exceed the actual cost of that service.
“Many financial institutions obscure the true price of their services by luring customers with enticing offers and then charging excessive junk fees,” said CFPB Director Rohit Chopra. “By promoting competition and ridding the market of illegal practices, we hope to save Americans billions.”
Although this initiative is not aimed at the ARM industry, it can serve as a good indicator of the temperature of the CFPB under Mr. Chopra's direction. Further, this initiative is a good reminder that any pass-through costs to consumers should be adequately documented and disclosed to the consumer.