In January of this year, the Consumer Financial Protection Bureau (CFPB) declared war on its newest enemy: so-called “junk fees.” The Bureau put out a press release with a headline that cleverly read, “Consumer Financial Protection Bureau Launches Initiative to Save Americans Billions in Junk Fees.”¹ The problem is that neither in the announcement nor in the months since has the Bureau been able to find a definition for the term “junk fee.” Instead, they have offered vague explanations of what could qualify, which could include nearly every consumer fee. CFPB Director Chopra has even gone so far as to suggest he has authority over hotel fees – he does not.
One of the reasons the Bureau relies on vague descriptions and absent data in their announcement is likely the fact that data does not support their arguments. In fact, data actually shows that Americans would rather pay the associated fees to ensure easy payments and have access to their desired banking services. The “junk fee” exercise is yet another one of the Bureau’s attempts to expand its power and unilaterally determine what is and is not legal based purely on Director Chopra’s biases. It is a pattern we have seen repeat itself over and over.
For this reason, Ranking Member Patrick McHenry and I led a letter² to Director Chopra regarding this unethical practice and urged the Bureau to stop disregarding consumer sentiment in favor of political priorities. The letter focused on overdraft fees, which the Bureau has decided should be classified as predatory “junk fees.” This is despite a study from Curinos that showed American consumers see the benefit in having overdraft fees and prefer to have that service available. While the Bureau also made the blatantly false statement that banks are reliant on overdraft fees, the numbers show they only make up a tiny percentage of revenue. Again, this isn’t about consumers or facts.
Unfortunately, my colleagues across the aisle in the Financial Services Committee seem to be on the same page as the CFPB. In our recent markup, Congresswoman Carolyn Maloney’s overdraft bill was passed on a purely partisan basis. This legislation builds on the Credit Card Accountability Responsibility and Disclosure (CARD) Act that in 2009, gave the CFPB the authority to set the cap for late fees. Congresswoman Maloney’s bill would give the CFPB similar authority over overdraft fees, which builds on an already misguided practice. The CFPB should not be a price setter, yet this bill has the potential to give the Bureau even more power over our financial system than it already has, which would affect almost every American consumer.
As bankers know, an overdraft is an emergency liquidity product that provides consumers with a cash infusion when they need it most. As our country’s inflation rates continue to make history with upsetting speed, this is no time to do away with overdraft services that help a family keep food on the table or gas in their car. The fact that the CFPB has such little regard for consumers is extremely concerning and is further evidence of the “government knows best” mentality in Washington. However, I truly believe that many of the Bureau’s actions are not supported by the law, and I am adamant that Congress and the private sector must hold them to account.
- Consumer Financial Protection Bureau Press Release
https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-launches-initiative-to-save-americans-billions-in-junk-fees/ - Luetkemeyer, McHenry Send Letter to Chopra Regarding So-Called “Junk” Fees
https://luetkemeyer.house.gov/news/documentsingle.aspx?DocumentID=400681
