Prepared Remarks of CFPB Director Rohit Chopra on a Press Call on Junk Fees

By: Consumer Financial Protection Bureau

Across the country, Americans are working hard to create and provide products sold here at home and worldwide.

That’s what makes American businesses grow and succeed, and it’s what helps our entire economy.

Americans are willing to pay a competitive price for great products because that’s how a fair economy works. And when companies focus on competing rather than cheating, everyone wins.

But, unfortunately, some companies don’t want to compete. Instead of investing to develop new and innovative products and services, they’re devoting their energy to devise new ways to trick us – or even force us – to pay billions of dollars yearly in junk fees.

Junk fees are unavoidable, surprise, excessive, or unnecessary charges imposed for fake or worthless services. Even when a service is legitimate, junk fees often far exceed the actual cost because the company figures out how to sidestep meaningful competition.

For years, junk fees have crept across the economy, and Americans are tired and fed up.

The Consumer Financial Protection Bureau, which polices the financial industry for abuses against families and honest businesses, has been focused on creating more competition, helping to eliminate junk fees, and stopping financial firms from cooking up new junk fees.

Our investigations have uncovered major misconduct at the nation’s largest banks. We caught Wells Fargo and Regions Bank in a multi-year surprise overdraft fee scam. By manipulating how payments were processed, the banks even charged people multiple overdraft fees in a single day rather than just one. We found a nationwide double-dipping scheme at Bank of America, where the bank charged multiple fees for the same transaction. Our junk fee enforcement actions have led to hundreds of millions of dollars in refunds for people nationwide.

And this work is impacting beyond just those specific law enforcement actions. For example, our report shows that financial firms have nearly eliminated transaction denial or NSF fees. Since 2021, that fee revenue shrank by 86%, saving consumers almost $2 billion annually.

Today, the CFPB is announcing additional actions to put money back in Americans’ pockets and stop new junk fees from emerging in the financial industry.

First, we’re issuing a new policy to ensure that the largest banks in the country play it straight with customers regarding their accounts rather than imposing excessive junk fees when people need basic answers to their questions.

Local banks tend to heavily emphasize customer service because they make their money through customer relationships. That’s why they’ll take the time to help you with any problems. However, big banks in our country have mostly abandoned relationship banking and have shifted toward algorithmic or assembly-line banking. Many now use chatbots and artificial intelligence to discourage or prevent you from talking to a human.

To address the customer service problems at big banks, Congress passed a law in 2010 requiring heightened customer service standards. However, to date, this law has not been enforced. We are changing that.

Today’s guidance outlines a pretty basic concept: when people request basic information about their accounts, big banks cannot charge junk fees or trap them in endless customer service loops. When people are just trying to get simple information to fix problems with their bank accounts or manage their finances, they shouldn’t be hit with one fee after another. Banks must answer questions completely, accurately, and on time.

Charging a competitive price for a legitimate service makes sense. But charging junk fees for basic customer responsiveness doesn’t.

In addition, we are issuing the results of our recent oversight inspections of major financial institutions. Based on our work, these companies will refund $140 million in junk fees they shouldn’t have charged in the first place, covering multiple lines of business.

We uncovered many egregious, illegal junk fee practices, including one company that charged a monthly paper statement fee without even printing or mailing the statement, leading to millions in fake revenue.

There is more to come. Later this month, the CFPB will propose new rules to create more competition in banking to make switching your account easier, finding more attractive rates, and avoiding junk fees.

Our work is paying off, and we’re already seeing billions of dollars in savings for Americans. We are pleased to be part of this all-of-government effort to promote competition for the benefit of families and honest businesses.

Thank you.