Banks charging so-called “surprise” overdraft and depositor fees can avoid violations of rules by following guidance issued by the federal consumer financial protection agency, it said Wednesday.
The Consumer Financial Protection Bureau (CFPB) said it issued the guidance (contained in a compliance bulletin on surprise deposit fees and a circular on surprise overdraft fees) to provide “guidance on existing law that will help law-abiding businesses seeking to fairly compete and the families they serve.”
On depositor fees, the CFPB said its compliance bulletin explains that indiscriminately charging the fees, regardless of circumstances, “likely violates the Consumer Financial Protection Act.” The agency used, as an example, the practice by banks of charging a fee to a consumer who deposits a check that bounces – even though the consumer may have “no idea or control over whether the check will clear, and sometimes, that person is the victim of check fraud.”
“Financial institutions can generally stay on the right side of the law when they employ more tailored fee policies that charge depositor fees only in situations where a depositor could have avoided the fee, such as when a depositor repeatedly deposits bad checks from the same originator,” CFPB said.
On overdraft fees, the agency contended that they could become a surprise fee when the customer doesn’t reasonably expect their actions to incur an overdraft fee. “For instance, even if a person closely monitors their account balances and carefully manages their spending to avoid overdraft fees, they can easily incur penalties when financial institutions employ processes that are unintelligible or manipulative,” the agency said, noting it had issued a circular on the subject on Wednesday as well.
CFPB Issues Guidance to Help Banks Avoid Charging Illegal Junk Fees on Deposit Accounts