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CFPB signals crackdown on hidden fees for banks, credit cards


Rohit Chopra, director of the Consumer Financial Protection Bureau.

Alex Edelman/Bloomberg via Getty Images

The Consumer Financial Protection Bureau on Wednesday signaled a broad crackdown on hidden and excessive fees charged by banks, mortgage lenders and other financial entities.

The federal agency, created in the wake of the 2008 financial crisis, is seeking consumers’ input on so-called junk fees associated with their bank, credit union, prepaid or credit card account, mortgage, loan or payment transfers.

Such experiences related to a product or service include: Fees people thought were covered by its baseline price; unexpected fees; fees that seemed too high; and fees where it was unclear why they were charged, according to the agency’s announcement Wednesday.

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There’s been an “explosion” in junk fees, such as overdraft fees charged by banks, late fees levied by credit-card companies, and closing fees when buying a home, CFPB Director Rohit Chopra said during a press call Wednesday morning.

“In many cases, junk fees act like penalties” instead of compensation for a legitimate service, according to Chopra, who was appointed by President Joe Biden. They also make it difficult for consumers to choose a product or service since they’re unaware of its true cost upfront, Chopra said.

The CFPB will use public comments to target new rules, issue guidance to firms, and focus its supervisory and enforcement resources, the agency said. The comment period ends March 31.

“Today, with our request for public comment on junk fees, we are beginning the process of ending banks’ reliance on these exploitative income streams,” making costs more transparent and perhaps saving American consumers billions of dollars, Chopra said.

Richard Hunt, the president and CEO of the Consumer Bankers Association, a trade group representing retail lenders, said the CFPB’s initiative was an attempt to “fearmonger,” calling it “fuzzy math at its best and political theater at its worst.”

“The reality is, despite their claims to the contrary, overdraft fees as a percent of total revenue across the industry made up less than 2% in 2019,” Hunt said in an emailed statement. “The Bureau has a responsibility to communicate with clarity and precision — not with overblown rhetoric to attack one industry.”


Credit card companies earned $14 billion in “punitive” late fees in 2019, while banks earned $15 billion in overdraft and non-sufficient-funds fees, the CFPB estimates.

The initiative is also a response to Biden’s call to spur more competition in the U.S. economy, according to Chopra, who framed high, inflated fees as an anti-competitive practice that has grown with industry consolidation.

This is progress, but it is not enough.

Rohit Chopra

CFPB director

“Capitalism without…


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