CPFB Offers Guidance on Illegal Junk Fees

The Consumer Financial Protection Bureau (CFPB) has issued a new advisory opinion on the topic of a provision enacted by Congress which z generally prohibits large banks and credit unions from imposing unreasonable obstacles on customers, such as charging excessive fees, for basic information about their own accounts. 

According to the CFPB, under a 2010 federal law, large banks and credit unions must provide complete and accurate account information when requested by accountholders. As many large banks shift away from a relationship banking model that prioritizes high levels of customer service, the new advisory opinion clarifies that people are entitled to get the basic information they need without having to pay junk fees. 

“While small relationship banks pride themselves on customer service, many large banks erect obstacle courses and impose junk fees to answer basic questions,” said CFPB Director Rohit Chopra. “While the biggest banks have abandoned the relationship banking model, federal law still requires them to answer certain customer inquiries completely, accurately, and in a timely manner.” 

The story behind this action is that in the run up to the 2008 financial crisis, large banks, along with other financial institutions, failed to ensure consumers had access to full details about their accounts. As millions of homeowners struggled to pay their mortgages, many were unable to even determine which companies held their loans. Upon the creation of the CFPB in the aftermath of the crisis, they required banks with at least $10 billion in assets to furnish this information on demand. 

When large financial institutions charge fees to respond to those requests, they impede customers from obtaining the essential information they are entitled to under federal law. From its market monitoring and the public’s comments about large banks’ customer service, the CFPB is aware that some large banks charge customers for basic information that is critical to fix problems with their bank account or to manage their finances. 

Banks give many different names to these fees—the new guidance explains how the CFPB will administer the legal requirement for large banks when it comes to customer service, including how the CFPB will evaluate fees imposed on customers for making reasonable requests, such as seeking original account agreements or information about recurring withdrawals from an account. 

The CFPB does not intend to seek monetary relief for potential violations of Section 1034(c) that occur prior to February 1, 2024. Consumers can submit complaints about junk fees and about financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372). 

Click here to read the CFPB’s opinion in its entirety.