CFPB Extends ‘Junk Fees’ Deadline After Receiving 25,000 Comments

The Consumer Financial Protection Bureau (CFPB) is extending its deadline to submit comments on its public consultation on “junk fees” until April 11. The CFPB received more than 25,000 comments in less than three months and given the ongoing interest from the public, the agency has decided to extend the deadline by about two weeks.  

In January, the bureau launched an initiative to reduce “junk fees,” a move the agency said will save consumers billions of dollars each year. The agency is looking for instances where fees were included for things people thought were covered in the baseline price of a product or service, fees that seemed too high for the service in question or situations where it was unclear why fees were even charged. 

Read Also: CFPB Opens Inquiry Against ‘Junk Fees’ 

“For example, hotels and concert venues advertise rates, only to add ‘resort fees’ and ‘service fees’ after the fact,” the CFPB said. These are easy examples for consumers to identify and sometimes, they may be difficult for a company to explain what service is charged.  

The problem with the term “junk fee” used by the CFPB is that it includes very different types of fees. The CFPB is also inquiring about deposits accounts, credit cards or payment transactions. This includes non-sufficient fund (NSF) fees and overdraft fees, but it also includes account maintenance fees, ATM fees or late fees in the case of credit cards. While the CFPB doesn’t suggest that all these fees aren’t associated to a given service or that they should be banned, it is nonetheless surprising to find all of them under the same umbrella of “junk fees.” 

This broad consultation has brought very diverse comments from consumers and institutions to either claim that fees should be scrapped or reconsider the definition of these fees. 

For example, Christina, a consumer that is trying to pay her graduate school tuition is asking the CFPB if the 2.75% service fee charge for using a credit card could be avoided. Andrew is complaining that reward cards are eating into margins for businesses and increasing the cost of doing business and the CFPB should cap them at lower amounts. Bree complains that the overdraft fees that he had paid several times unfairly target the more financially vulnerable. 

Then, on the other hand, a financial institution, Kohler Credit Union, defends the use of certain fees because they cover different services and the cost of doing business like paying wages. It also states that some of the examples used by the CFPB cannot be classified as “junk fees.” In its view, “these are fees that are disclosed up front to consumers and should not be a surprise to the consumer.” 

For the moment, CFPB´s advocacy efforts have rendered some results as banks have been announcing changes to their overdraft programs. These changes include eliminating NSF fees charged when transactions bounce, reducing the size of the overdraft fee or providing a grace period to bring the account back to positive before charging an overdraft fee. 

However, in the last sentence of the CFPB´s press release announcing the extension, the bureau leaves the door open for any action in the future. In particular, the agency says, “public input will help shape the agency’s rulemaking and guidance agenda and enforcement priorities by providing valuable insights into the most pressing needs and concerns, including uncovering potential illegal practices or fees.” 

Read More: CFPB’s Fight Against ‘Junk Fees’ May Need Further Explanation