The Consumer Financial Protection Bureau (CFPB) has launched an initiative to reduce “junk fees”, an initiative that the agency says will save consumers billions of dollars each year.
“Many financial institutions mask the true price of their services by enticing customers with enticing offers and then charging excessive fees,” CFPB Director Rohit Chopra said in a statement. Press release Wednesday (January 26). “By promoting competition and ridding the market of illegal practices, we hope to save Americans billions.”
According to the CFPB, companies are increasingly charging households and families “inflated and back-end” fees, creating a “fee economy” that distorts the free-brand system by obscuring the true cost of products.
“For example, hotels and concert halls advertise rates, only to add ‘resort fees’ and ‘service fees’ after the fact.” specifies the CFPB. “And the fees allegedly charged to cover individual expenses, such as document processing, can often far exceed the actual cost of that service.”
The agency says its research revealed many areas where return shipping costs could be hiding the true cost of a product. In 2019, major credit card companies charged over $14 billion in punitive late fees. In the same year, bank revenues from overdraft and insufficient funds fees topped $15 billion.
The CFPB says it’s interested in hearing people talk about their experience with bank, credit union or credit card account fees, as well as mortgages, loans and payment transfers.
They look for cases where charges were included for things that people thought were covered in the base price of a product or service, charges that seemed too high for the service in question, or situations where it wasn’t even clear why a fee was being charged.
The agency says it also wants to hear from small business owners, nonprofits, legal aid attorneys, academics and researchers, state and local government officials, and financial institutions. , including small banks and credit unions.
Read more: CFPB to test college loan programs
Last week, the CFPB said it planned to look into post-secondary schools that provide private loans to students. The agency said it was concerned about borrowers’ experience with institutional loans, as students faced high interest rates and difficult collection practices.