The latest risk alert from CUNA Mutual Group warns credit unions about recent guidance from the CFPB related to junk fees — overdraft fees on certain debit card transactions and fees charged on returned deposited items.

The guidance, “CFPB Issues Guidance to Help Banks Avoid Charging Illegal Junk Fees on Deposit Accounts,” refers to “two junk fee practices that are likely unfair and unlawful under existing law,” including overdraft fees on certain debit card transactions and fees charged on returned deposited items, according to the risk alert. Further, the CFPB indicated that charging these fees likely violates the Consumer Financial Protection Act, which prohibits conduct that constitutes an unfair act or practice.

Risk mitigation for credit unions:

• Discuss practices on APSN overdraft fees on debit card transactions and returned deposited item fees with legal counsel.
• Determine if changes to your credit union practices are needed to mitigate the risk. Credit unions that charge a returned deposited item fee should review their processes to determine if the assessment of this fee can be tailored as suggested by the CFPB.
• In the event the CFPB uses its rulemaking authority to limit or prohibit APSN overdraft fees, credit unions should be prepared to change their processes and fee structure accordingly.

CUNA Mutual Group’s risk alerts, in addition to additional risk-prevention resources, may be accessed in their Protection Resource Center. Log-in is required.