CFPB Bans Two Types of Illegal Junk Fees on Deposits

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On Oct. 26, 2022, the Consumer Financial Protection Bureau (CFPB) issued guidance effectively banning two practices it deems “junk fees”.

  1. Surprise overdraft fees: These are overdraft fees charged to consumers who had enough money in their account to cover a debit charge at the time a financial institution authorizes it.
  2. Indiscriminately charging depositor fees: Fees were charged to every person who deposits a check that bounces. The CFPB deems this an unexpected shock to depositors who thought they were increasing their funds.

According to the CFPB, both of these practices likely constitute an unfair practice consumers cannot reasonably avoid. The CFPB explains both practices and how to avoid them in the Consumer Financial Protection Circular on surprise overdraft fees and the CFPB’s compliance bulletin on surprise depositor fees. Should you have questions about how your regulatory compliance program is impacted by junk fees, contact Doeren Mayhew's regulatory compliance specialists today.

John Zasada
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John Zasada is a Principal in Doeren Mayhew's Financial Institutions Group, where he assists financial institutions in navigating regulatory compliance.

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