https://www.usatoday.com/story/money/2022/10/26/bank-fees-junk-biden-guidance-low-income-consumers/10607419002/?link_id=36&can_id=676680e690ebef04ff7b58faa7b3f94f&source=email-herschel-walker-sacked-by-new-october-surprise-2&email_referrer=email_1718429&email_subject=herschel-walker-sacked-by-new-october-surprise
Joe Biden, CFPB target junk fees, hoping to ease economic pressure on
low-income families
The Biden administration on Wednesday said it was going after "junk fees"
charged by banks that largely target low-income residents and people of color
<https://www.usatoday.com/story/money/2020/01/15/bank-fees-minorities-millennials-pay-more-than-anyone-else/4465861002/>.
The Consumer Financial Protection Bureau issued guidance to end two junk fee
practices that it says are likely unfair and unlawful.
The guidance, if adopted by financial institutions, could save Americans
billions of dollars according to the CFPB.
"They're unfair and they hit marginalized Americans the hardest," President
Joe Biden told a press conference. "They benefit big corporations. Not
consumers. Not working families. And that changes now."
Here are the fees and how they may affect you:
What are bank junk fees?
Let's start with a "surprise depositor fee" This occurs when a consumer
deposits a check that bounces, resulting in a bank charging a fee of $10 to
$19 to the depositor.
The CFPB said charging a fee to the depositor penalizes the person who could
not anticipate the check would bounce, while doing nothing to deter the
originator from writing bad checks.
The agency said financial institutions "can generally stay on the right side
of the law when they employ more tailored fee policies that charge depositor
fees only in situations where a depositor could have avoided the fee, such as
when a depositor repeatedly deposits bad checks from the same originator."
What is a surprise overdraft fee?
A surprise overdraft fee, which may be up to $36, can occur when a customer
doesn't reasonably expect that their actions would incur that fee, such as
charging penalties even when a consumer has a positive account balance.
This can happen when a bank displays that a customer has sufficient available
funds to complete a debit card purchase at the time of the transaction, but
the consumer is later charged an overdraft fee.
Often, the federal agency said, the financial institution relies on complex
back-office practices to justify charging the fee.
The CFPB in September took action against Regions Bank for charging surprise
overdraft fees
<https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-regions-bank-pay-191-million-for-illegal-surprise-overdraft-fees/>
known as authorized positive fees, and the bank was ordered to refund
customers at least $141 million and pay a $50 million penalty.
Who makes money on fees?
While not part of the CFPB's guidance, the White House also released
estimates on how much money transportation, banking, internet and hospitality
companies make on fees.
Here's a breakdown:
Credit card late payment fees: $12 billion in 2020 (CFPB estimate)
<https://www.consumerfinance.gov/about-us/newsroom/cfpb-finds-credit-card-companies-charged-12-billion-in-late-fee-penalties-in-2020/>.
Bank overdraft and non-sufficient funds (NSF) fees: $15.5 billion in 2019
(CFPB estimate)
<https://www.consumerfinance.gov/about-us/newsroom/cfpb-research-shows-banks-deep-dependence-on-overdraft-fees/>.
Hotel resort fees: $2.93 billion in 2018 (NYU estimate)
<https://bjornhansonhospitality.com/fees-%26-surcharges>.
Airline baggage and change fees: $5.97 billion in 2021 (DOT statistics)
<https://www.bts.gov/newsroom/reservation-cancellationchange-fees-airline-2021>.
Cable hidden fees: $28 billion in 2019 (Consumer Reports estimate)
<https://advocacy.consumerreports.org/wp-content/uploads/2019/10/CR_WhatTheFeeReport_6F_sm-1.pdf>.