The CFPB marketed its latest set of supervisory highlights as the “Junk Fees Special Edition.” The splashy headline is consistent with the agency’s recent focus on fees that it asserts are hidden from the competitive process. In speeches, press releases, and blog posts (and now a single proposed rule), the CFPB has stressed its growing concern with “junk” fees. The CFPB even created a section of its web site solely devoted to press releases on “junk” fees.
Gleaning compliance guidance from Supervisory Highlights is not always straightforward, as they do not provide full details. However, in this Special Edition, the CFPB notes that it has characterized the following types of fees and practices as junk:
Deposit Accounts
- Overdraft Fees – specifically, those charged when the consumer had a sufficient balance when the financial institution authorized the transaction, but not at the time of settlement.
- Multiple Non-Sufficient Funds Fees for the Same Transaction.
Auto/Title Financing
- Late Fees that Exceed the Credit Contract or After Acceleration/Repossession.
- Estimated Repossession Fees that Greatly Exceed Average Costs – even if the excess was refunded.
- Payment Processing Fees – specifically, those that exceed processing costs, when free payment options are only available for checks or ACH transfers.
- Fees to Retrieve Personal Property from Repossessed Vehicles – the CFPB said such fees were “unexpected” and unfair.
- Premature Repossession and Related Fees – charging late fees and repossessing vehicles before title loan payments became due.
Mortgage Loan Servicing