The Consumer Financial Protection Bureau is preparing to crack down on what it calls junk fees — late payment charges, hotel resort fees and other tacked-on expenses that collectively add billions to what Americans pay for goods and services.“Junk fees make it harder for us to choose the best product or service because the true cost is hidden,” Rohit Chopra, the bureau’s director, said at a news conference on Wednesday as the bureau initiated a request for public comment on the use of such fees. Such a request is the formal first step in the lengthy process of creating new rules for financial services providers.Mr. Chopra said his agency was particularly interested in areas in which providers seem to operate in lock step — for example, the $25 to $35 fees that many credit card companies charge for overdue payments, which reap them an estimated $14 billion annually. Balance transfer fees are another focus: Consumers transferred $35 billion in 2020, incurring fees that averaged around 3 percent.Bureau officials also cited the service fees levied by concert ticket providers and the resort fees imposed by hotels as areas of concern.The junk-fees request is the latest move by the consumer bureau to focus on charges levied on users. In December, the agency issued a report on the $15 billion a year that banks collect in overdraft and insufficient funds fees. Under regulatory pressure, banks are paring them back: Bank of America recently said it would trim its fee to $10 from $35, and Capital One and Ally Financial eliminated theirs entirely.Mr. Chopra said on Wednesday that those changes were “progress, but it is not enough.”The agency set a March 31 deadline for comments on so-called junk fees. Bureau officials said they intended to proceed quickly to rule-making, but they also indicated that this issue was likely to remain a focus throughout Mr. Chopra’s five-year term, which is scheduled to run through 2026.By: Stacy Cowley
Title: The federal consumer bureau wants to stamp out what it calls ‘junk fees.’
Sourced From: www.nytimes.com/2022/01/26/business/cfpb-junk-fees.html
Published Date: Wed, 26 Jan 2022 21:28:29 +0000
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