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CFPB Issues Special Edition of its Supervisory Highlights Related to Junk Fees
Michael Christians • March 18, 2023
On March 8th, the Consumer Financial Protection Bureau (CFPB) issued a special edition of its Supervisory Highlights publication specific to junk fees.
The agency identified the following fee practices as unfair when it comes to deposit accounts:
- Charging overdraft fees in connection with authorize positive, settle negative (APSN) transactions
- Charging multiple overdraft fees when the same transaction is presented multiple times for payment
The agency also identified the following fee practices as unfair or deceptive when it comes to mortgage servicing:
- Charging a higher late fee than what is contractually permitted
- Charging a borrower late fees when his/her periodic statement shows no such fees due
- Providing a periodic statement showing that the borrower owes a monthly premium in connection with a lender-paid private mortgage insurance policy
- Charging borrowers private mortgage insurance premiums after cancellation or termination, in direct violation of the Homeowner's Protection Act
- Charging borrowers late fees, charges, or other penalties, while in forbearance, in direct violation of the CARES Act
- Charging borrowers for unnecessary property inspections
The report also found instances where junk fees were charged in connection with auto loan servicing, student loan servicing, and payday/small dollar lending.
Finally, the report listed the most recent developments under the CFPB's supervisory program to combat junk fees:
- The agency has issued a proposed rule to cap credit card late fees at $8
- The agency has issued a bulletin advising financial institutions that charging a customer a returned deposit item fee regardless of the circumstances or patterns of behavior on the account is an unfair act and practice
- The agency has issued an advisory opinion informing debt collectors that federal law often prohibits pay-to-pay fees
You can access a copy of the report here.
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5438 South Prairie View Drive
West Des Moines, IA 50266
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319-325-1171
michael@mchristiansconsulting.com
Michael Christians Consulting, LLC
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