Guidance aims to combat illegal junk fees on deposit accounts

The CFPB on Wednesday issued guidance about two junk fee practices the bureau says are likely unfair and unlawful under existing law.

The first, surprise overdraft fees, includes overdraft fees charged when consumers had enough money in their account to cover a debit charge at the time the bank authorizes it. The second is the practice of indiscriminately charging depositor fees to every person who deposits a check that bounces. The penalty is an unexpected shock to depositors who thought they were increasing their funds, according to the CFPB.

The bureau’s guidance is contained in a circular on surprise overdraft fees and a compliance bulletin on surprise depositor fees, which outline when a financial institution’s back-end penalties likely break the law. The circular and compliance bulletin are the part of the bureau’s junk-fee initiative, in which the CFPB aims to increase competition and reduce unnecessary financial burdens on Americans.

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