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However , they ultimately have a broader and more indirect influence on institutions regulated by agencies , including the National Credit Union Association , the Federal Reserve Bank , the Office of the Comptroller of Currency and Federal Deposit Insurance Corporation , given the current regulatory scrutiny around junk fees as a whole .
Note , the CFPB is not the only organization that has raised concerns and has been cautioning of the risk of junk fees . However , they have been the most vocal on this matter and have taken an aggressive stance in affirming that back-end junk fees have a substantial cost to consumers to the tune of billions of dollars .
Supervisory Observations
Some of the most pressing junk fee issues to the CFPB include fees that :
• Overcharge consumers
• Are regularly assessed without proper authorization
• Are often misrepresented and / or improperly disclosed
Be aware the primary focus of the topic of fees is on the unfair , deceptive , or abusive acts and practices ( UDAAP ) risk . However , examiners noted risk extends beyond this scope and may implicate other consumer protection laws , like the Credit Card , Accountability , Responsibility and Disclosure Act of 2009 ( CARD Act ), the Fair Debt Collection Practices Act ( FDCPA ) and the Truth in Lending Act ( Regulation Z ).
Deposit Accounts
Unsurprisingly , the CFPB listed authorized positive , settle negative ( APSN ) overdraft fees and non-sufficient fund ( NSF ) fees assessed to a consumer multiple times for the same transaction as the two most detrimental charges linked to deposit accounts .
For context , the agency defines APSN overdraft fees as occurring when an institution chooses to assess one or more overdraft fees on transactions , like debit card purchases or ATM withdrawals . In these instances , the consumer may have had sufficient available balance at the time the institution authorized the transaction , but later gets applied to an insufficient or negative account balance once all pending transactions are settled . The publication notes that delays in the settlement of transactions causing the account to show a negative balance may often be caused by multiple factors including , “ Intervening authorizations resulting in holds , settlement of other transactions , timing of presentment of the transaction for settlement , and other complex processes relating to transaction order processing practices and financial institution policies .” The fundamental issue raised with these types of fees is , that regardless of appropriate disclosures , they are assessed in these circumstances when considered unfair , deceptive , and abusive given the consumer cannot easily and reasonably avoid these charges because of the factors mentioned earlier . Also , risk can arise if the institution updates its policies and practices to remove this fee in theory , but has not established an appropriate framework to ensure APSN fees can actually be avoided in practice . Despite being in the initial stages of research , at least tens of millions of dollars of consumer injuries have been linked to APSN overdraft fees , with identified institutions providing redress to over 170,000 consumers .
Similar to APSN overdraft fees , the CFPB also noted multiple insufficient funds , or NSF , fees for a single transaction , such as a check debit card payment via ACH made towards a utility bill , as concerning . Field examiners have raised almost identical issues with these types of fees as far as them being unfair , deceptive , and abusive to consumers who are unable to reasonably avoid being charged applicable fees by bringing their account balance positive in the short amount of time that duplicate items can be represented by a merchant . These timelines can often be as short as the next day . While not directly discussed , the CFPB has noted in prior publications that inadequate disclosures of overdraft fees , inappropriate oversight and monitoring of thirdparty payment processors , and weak internal systems for tracking account balances have also played a key role in UDAAP risk .
Auto Servicing
Although junk fees related to deposit accounts are the most widely discussed at the moment , the CFPB ’ s examiners also identified UDAAP concerns related to unauthorized late fees and estimates for fees related to vehicle repossessions . Specifically , examiners found some auto loan servicers were overcharging member late fees above amounts originally contracted and disclosed . They provided the example of a servicer who coded their system to assess a blanket fee of $ 25 to consumers
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