The CFPB's Crusade Against Junk Fees

<p>Junk fees – those unexpected surcharges that appear everywhere – are the
bane of all our lives. But don’t worry, if you’re an American, the CFPB is here
to save the day.</p><p>The CFPB Strikes Back</p><p>These days, junk fees lurk everywhere, from immediate denials, to fees for <a href="">payments</a>, or foreign <a href="">exchange</a>, but have no fear, the Consumer
Financial Protection Bureau (CFPB) is riding to the rescue. The cause?
Real-time declined transactions, a fertile ground for the insertion of sneaky
junk fees. A newly-proposed rule is the CFPB's latest weapon to thwart
financial institutions from profiting off declined swipes, taps, or clicks.</p><p>Declined Transactions, Real-time Justice</p><p>The CFPB's proposed rule zeroes in on the archaic practice of charging
non-sufficient funds (NSF) fees for transactions denied at the point of sale.
Think declined debit card purchases or ATM withdrawals. “Over the years, large
banks and their consultants have concocted new junk fees for fake services that
cost almost nothing to deliver,” said CFPB Director Rohit Chopra. “Banks should
be competing to provide better products at lower costs, not innovating to
impose extra fees for no value. The CFPB will continue to rid the market of
junk fees today and prevent new junk fees from emerging in the future.”</p><blockquote><p lang="en" dir="ltr">The CFPB proposed today to block banks and other financial institutions from one potential source of new junk fee revenue – fees on transactions declined right at the swipe, tap, or click. <a href=""></a></p>— (@CFPB) <a href="">January 24, 2024</a></blockquote><p>Real-time Fair Play</p><p>As technology evolves, financial institutions have often gained the
ability to reject transactions instantaneously. The CFPB, playing tech
watchdog, aims to prevent these real-time declines from becoming a cash cow for
banks. Past tech advancements, like the overdraft loophole, led to fee
increases. The CFPB, learning from history, is moving to close loopholes and
protect consumers from emerging fees.</p><p>Beyond the Proposed Rule: CFPB's Junk Fee Cleanup</p><p>The proposed rule is just one cog in the CFPB's arsenal against junk
fees. In 2022, they initiated a crusade against the fees, resulting in substantial
reductions and forced Bank of America to cough up $100 million for NSF fee
malfeasance. </p><p>Read the proposed rule <a href="">here</a>.</p>

This article was written by Louis Parks at

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