CFPB’s Chopra Hints at Credit Card Rule Changes in Congress Hearing


Rohit Chopra, director of the Consumer Financial Protection Bureau (CFPB) gave his testimony before the House Committee on Financial Services on Wednesday (April 27), one day after attending a similar hearing in a Senate Banking committee.

While the written testimony of Chopra was identical in the two meetings, the responses provided in the House Committee shed a bit of light on some issues that didn’t come up the day before or that were not addressed in the written statement.

Perhaps one of the most relevant topics in the CFPB’s agenda that was missing during the hearing at the Senate was the investigation on “junk fees.” But Congresswoman Ann Wagner in the first intervention of the afternoon used all her time on this topic, questioning Chopra about the cost-benefit analysis of possible rulemaking initiatives and the scope of the investigation.

Chopra confirmed that inter-exchange fees, while a concern for many businesses, were not part of the investigation. Yet, the same cannot be said for other fees like late fees, which may be subject to scrutiny.

Wagner also pushed Chopra to provide a definition of a “junk fee.” Chopra responded, “The way I define it is when there is a fee that is often not subject to the full competitive process, and specifically for services you may have never asked for or its cost is way in excess of what a competitive market would offer.”

This definition, however, could be considered subjective or at the very least, would require first to establish which markets are not “subject to the full competitive process,” which is a whole new analysis to determine which fees are “junk fees.”

Chopra tried to provide more information about the type of fees that the agency may be looking at, suggesting that there is a “fee creep” and people are often surprised by fees that they don’t even know why they are charged. This could suggest that fees established to compensate for a service, like overdraft fees, may not be a priority in the CFPB’s analysis, but Chopra was ambiguous in his response.

Rep. Carolyn Maloney asked Chopra about credit card fees and the CFPB director said that is a priority for the agency, and he ordered his staff to look at whether the agency can reopen the CARD Act rules to see if any change is needed. “Certainly, late fees are an area that I expect to be questions where we will solicit input on because it is important that this market is competitive.”

Another topic to which Chopra only devoted a few minutes but, in his answers, revealed more than his written testimony was technology in finance. When asked about financial innovation by Rep. Frank Lucas, Chopra said that he is a big supporter of technology in finance because it helps to drive costs down for consumers and businesses and better choices.

But he stated his concerns: “I have a worry, I don’t want technology in finance services just dominated by big tech companies like we see in China.” Chopra hinted that the CFPB will continue working to insulate more competition and innovation in some parts of the financial ecosystem because there is a risk that some of these parts could be dominated by tech giants.

Read more: CFPB’s Chopra Tells Senators to Expect More on Big Tech, Repeat Offenders and Open Banking