Bank accounts, mortgages, student loans, and auto loans all called out in federal regulator's report
The Consumer Financial Protection Bureau (CFPB) is taking on junk fees in the financial marketplace in an effort to protect consumers. In the latest action related to this effort, the CFPB has exposed fees it says are illegal but are charged across a range of financial products.
A new report calls out these fees and notes that consumers should be aware that many of them are unlawful.
“For years, junk fees have been creeping across the economy,” said CFPB Director Rohit Chopra. “Our report describes a host of illegal junk fee practices that the CFPB has uncovered across the financial services sector.”
The report offers some specific examples of junk fees that consumers are asked to pay - even though doing so is against the law.
Here are just a few:
- Surprise overdraft fees: Institutions assessed unfair overdraft fees by authorizing a debit that was made with a positive balance, but later charging an overdraft fee because of intervening transactions that were processed before the debit settled. Account holders could not reasonably avoid these surprise fees, irrespective of account disclosures.
- Out-of-bounds and fake late fees on auto loans: Servicers charged late fees that exceeded the permissible amounts stated in borrowers’ contracts. Servicers also charged late fees to consumers whose cars had been repossessed and their loans accelerated, which means that no payment was due that could have been subject to a late fee.
- Excessive late fee amounts on mortgage loans: Mortgage servicers charged the top late fee amount allowed by relevant state laws, even when homeowners’ mortgage contracts capped late fee amounts below state maximums.
Consumers who believe they have been subject to these or other unlawful late fees can submit complaints by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).
For more consumer finance news, check out my newsletter!
Comments / 0