The Biden administration on Wednesday said it was going after 'junk fees' charged by banks that largely target low-income residents and people of color.
the action “attempts to sensationalize highly regulated fees that are already clearly disclosed to customers under existing federal rules.”Let's start with a"surprise depositor fee" This occurs when a consumer deposits a check that bounces, resulting in a bank charging a fee of $10 to $19 to the depositor.
The CFPB said charging a fee to the depositor penalizes the person who could not anticipate the check would bounce, while doing nothing to deter the originator from writing bad checks. The agency said financial institutions"can generally stay on the right side of the law when they employ more tailored fee policies that charge depositor fees only in situations where a depositor could have avoided the fee, such as when a depositor repeatedly deposits bad checks from the same originator.
This can happen when a bank displays that a customer has sufficient available funds to complete a debit card purchase at the time of the transaction, but the consumer is later charged an overdraft fee. Often, the federal agency said, the financial institution relies on complex back-office practices to justify charging the fee. known as authorized positive fees, and the bank was ordered to refund customers at least $141 million and pay a $50 million penalty. While not part of the CFPB's guidance, the White House also released estimates on how much money transportation, banking, internet and hospitality companies make on fees.
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