Prepared Remarks of CFPB Director Rohit Chopra on a Press Call on Junk Fees

By Rohit Chopra – OCT 11, 2023

Across the country, Americans are working hard to create and provide products sold here at home and around the world.

That’s what makes American businesses grow and succeed, and it’s what helps our entire economy.

Americans are willing to pay a competitive price for great products, because that’s how a fair economy works. And when companies focus on competing, rather than cheating, everyone wins.

But, unfortunately, some companies don’t want to compete. Instead of investing to develop new and innovative products and services, they’re devoting their energy to come up with new ways to trick us – or even force us – to pay billions of dollars each year in junk fees.

Junk fees are unavoidable, surprise, excessive, or unnecessary charges imposed for fake or even worthless services. Even when a service is legitimate, junk fees often far exceed the actual cost, because the company figures out how to sidestep meaningful competition.

For years, junk fees have been creeping across the economy, and Americans are tired and fed up.

The Consumer Financial Protection Bureau, which polices the financial industry for abuses against families and honest businesses, has been focused on creating more competition, which is helping to eliminate junk fees and stop financial firms from cooking up new junk fees.

Our investigations have uncovered major misconduct at the nation’s largest banks. We caught Wells Fargo and Regions Bank in a multi-year surprise overdraft fee scam. By manipulating how payments were processed, the banks even charged people multiple overdraft fees in a single day, rather than just one. At Bank of America, we found a nationwide double-dipping scheme, where the bank charged multiple fees for the same transaction. Our junk fee enforcement actions have led to hundreds of millions of dollars in refunds for people across the country.

And this work is having an impact beyond just those specific law enforcement actions. For example, a report we issued today shows that financial firms have nearly eliminated transaction denial fees or NSF fees entirely. Since 2021, that fee revenue shrank by 86%, saving consumers almost $2 billion every year.

Today, the CFPB is announcing additional actions that will put money back in Americans’ pockets and stop new junk fees from emerging in the financial industry.

First, we’re issuing a new policy to ensure that the largest banks in the country play it straight with customers when it comes to their accounts, rather than imposing excessive junk fees when people need basic answers to their questions.

Local banks tend to put a heavy emphasis on customer service, because they make their money through their customer relationships. That’s why they’ll take the time to help you with any problems that arise. But big banks in our country have mostly abandoned relationship banking and have shifted toward algorithmic or assembly-line banking. Many of them now use chatbots and artificial intelligence to discourage or prevent you from talking to a human.

To address the customer service problems at big banks, Congress passed a law in 2010 requiring heightened customer service standards. However, to date, this law has not been enforced. We are changing that.

Today’s guidance outlines a pretty basic concept: when people request basic information about their accounts, big banks cannot charge them junk fees or trap them in endless customer service loops. When people are just trying to get simple information to fix problems with their bank account or manage their finances, they shouldn’t be hit with one fee after another. Banks must answer questions completely, accurately, and in a timely manner.

Charging a competitive price for a legitimate service make sense. But charging junk fees for basic customer responsiveness doesn’t.

In addition, we are issuing the results of our recent oversight inspections of major financial institutions. Based on our work, these companies will be refunding $140 million in junk fees they shouldn’t have charged in the first place, covering multiple lines of business.

We uncovered a number of egregious, illegal junk fee practices, including one company that charged a monthly paper statement fee without even printing or mailing the statement, leading to millions in fake revenue.

There is more to come. Later this month, the CFPB will propose new rules to create more competition in banking to make it easier to switch your account, find more attractive rates, and avoid junk fees.

Our work is paying off, and we’re already seeing billions of dollars in savings for Americans. We are pleased to be part of this all-of-government effort to promote competition for the benefit of both families and honest businesses.

Thank you.