Luetkemeyer, McHenry Send Letter to Chopra Regarding So-Called “Junk” Fees
Washington, March 31, 2022
Tags: Financial Services
WASHINGTON, D.C. – Today, Congressman Blaine Luetkemeyer (MO-03), Ranking Member on the Subcommittee on Consumer Protection and Financial Institutions, Congressman Patrick McHenry (NC-10), Ranking Member on the House Financial Services Committee were joined by Financial Services Committee Republicans on a letter to Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra regarding the Bureau’s attempt to stigmatize all consumer financial fees despite studies and data that indicate the American consumer would rather pay the associated fees that allow their payment or purchase to take place. Excerpts and link to the full letter can be found below.
“We agree consumer education and simplification of disclosures should be a priority. There is, however, always a cost associated with providing financial services and access to credit. These costs include the risk to the offering firm for such product and credit extensions, which may be offset in part by certain fees for service. Moreover, there are statutory and regulatory requirements in place that guide financial institutions in how to properly communicate these costs, including the Truth In Lending Act (TILA) disclosure requirements and fee disclosures promulgated by the CFPB.
“Furthermore, the CFPB broadly groups all fees associated with consumer products and services as ‘junk fees’ and does not provide any legal definition of the term or any statutory authority to define such a term.”
“Overdraft protection is a short-term liquidity product that can aid consumers in making ends meet when a deposit account balance is low, particularly for those consumers who are unable to qualify for traditional credit products. A recent study indicates most consumers are well aware of the cost associated with tapping into overdraft coverage and choose to use this low-cost option to cover temporary funding shortfalls. Some financial institutions will derive a higher percentage of revenue from deposit account related fees, such as overdraft or NSF, based on their business models and product offerings. Moreover, in December 2021, Acting Comptroller Hsu outlined potential reforms while cautioning that ‘limiting overdrafts may limit the financial capacity for those who need it most.’”
Link to the full letter can be found HERE.