On March 8, 2023, the CFPB released a special edition of its Supervisory Highlights that reports on unlawful junk fees uncovered in deposit accounts and in multiple loan servicing markets, including in mortgage, student, and payday lending. The said findings were found during examinations between July 1, 2022, and February 1, 2023. According to the CFPB, these unlawful fees corrode family finances, force up families’ banking and borrowing costs, and are not easily avoided, thus the agency is continuously rooting unlawful fees out of consumer financial markets.
In October 2022, the CFPB issued guidance on how to avoid charging surprise overdraft fees. The CFPB notes that at least 20 of the largest banks in the United States do not charge surprise overdraft fees and banks that the CFPB has examined thus far will refund roughly $30 million to about 170,000 account holders who were assessed surprise overdraft fees.
During the supervisory activities conducted by the CFPB from July 1, 2022, and February 1, 2023, the CFPB has uncovered unlawful junk fees in several areas of financial services as detailed below:
In deposit accounts:
Surprise overdraft fees
Multiple non-sufficient funds (NSF) fees
In auto loan servicing:
Out-of-bounds and fake late fees
Inflated estimated repossession fees
Pay-to-pay payment fees and kickback payments
In mortgage loan servicing:
Excessive late fee amounts
Fees for unnecessary property inspections
Fake Private Mortgage Insurance (PMI) premium charges
Failure to waive fees for homeowners entering some loss mitigation options
In payday and title lending
Vehicle repossession and property retrieval fees
Vehicles being repossessed with fees tacked on despite prior payment arrangements
In student loan servicing:
Charging late fees and interest after payments were made on time
Read the CFPB’s article here.
The Supervisory Highlights special edition can be found here.
