CFPB Deputy Director Outlines Efforts to Reduce "Junk Fees"

The CFPB Deputy Director Zixta Q. Martinez outlined the CFPB's efforts to reduce "junk fees" in consumer financial markets. In her remarks before the Consumer Law Scholars Conference, she said that "[convenience fees] layer extra charges on top of the expected market price for a product or service," and they disproportionately affect specific populations, especially low-income and Black Americans.

Ms. Martinez referred to the CFPB's recent advisory opinion on surprise overdraft fees, which affirmed Section 808 (1) ("Unfair Practices") of the Fair Debt Collection Practice Act. This Section prohibits debt collectors from collecting pay-to-pay fees, such as fees imposed for making a payment online or by phone. Bank revenue from these overdraft and non-sufficient fund fees had surpassed $15 billion in 2019, and the CFPB held two major financial institutions accountable for illegal overdraft fee practices. Today, 20 of the country's largest banks, which hold 62% of the volume of consumer deposit accounts, no longer charge surprise overdraft fees.

The Deputy Director noted the CFPB's supervision and enforcement efforts, which include (i) the identification of illegal "pay-to-pay" fees in mortgage services, including sizable phone payment fees (even though consumers were not made aware of these penalties) and (ii) a September 2022 order against Regions bank, where it was ordered to pay more than $190 million in customer redress and penalties for surprise overdraft fees.

In addition, Ms. Martinez highlighted the important role that academic and scholarly communities play in helping to put an end to junk fees and spotting future risks.