More than $120 million in junk fee refunds since August from bank account deposits has resulted in the federal consumer financial protection agency’s supervision work on the charges, the agency said in a release Wednesday.
Meanwhile, the agency said, fees for overdraft and non-sufficient funds (NSF) at banks have declined by $6.1 billion since before the COVID pandemic – although that decline seems to have slowed.
The Consumer Financial Protection Bureau (CFPB) said the refunds were in addition to $140 million refunded to consumers from February to August of last year in bank account deposits, auto loan servicing and international money transfers.
The bureau made the claims in a release accompanying the spring, 2024 issue of its Supervisory Highlights. The issue focused mostly on illegal junk fees in mortgage servicing. However, it also outlined the agency’s work on bank account fees.
Regarding mortgage servicing, the bureau said its examinations found that servicers were: charging prohibited property inspection fees; sending deceptive notices to homeowners; and violating loss mitigation rules “that help struggling borrowers stay in their homes.”
“In response to the CFPB’s findings, financial institutions refunded junk fees to borrowers and stopped their illegal practices,” the bureau said.
In another report, issued late Tuesday, the bureau release also asserted that overdraft and non-sufficient funds (NSF) fees have dropped by more than $6.1 billion since before the coronavirus crisis of 2020. “This reflects a nearly $2 billion annual reduction in NSF fees, and a roughly $4 billion annual reduction in overdraft fees,” the bureau said.
In fact, the agency said, the $6.1 billion decline between 2023 and 2019 is larger than the $5.5 billion decline CFPB projected based on Q4 2022 in its analysis of May, 2023.
However, the bureau said, banks appear to have “stopped significantly reducing overdraft fees, as their major policy changes have taken effect and further policy changes have slowed.”
The bureau said it has found that, following five straight quarterly declines in overdraft/NSF revenue, “such revenue remained flat across all quarters of 2023.”
“Even with the substantial reductions in fees versus prior years, consumers paid over $5.8 billion in 2023 in reported overdraft/NSF fees,” the bureau said.
However, the CFPB said financial institutions are generally not increasing other checking account fees to compensate for reduced overdraft/NSF revenue. Across all reporting banks, the bureau said, combined account maintenance and ATM fees remained flat from 2019 to 2023.
CFPB Takes Action to Stop Illegal Junk Fees in Mortgage Servicing