CFPB Issues Guidance to Prevent Large Banks from Charging “Illegal” Junk Fees for Basic Services

The Consumer Financial Protection Bureau (CFPB) issued an advisory opinion regarding a provision enacted by Congress that generally prohibits large banks and credit unions from imposing unreasonable obstacles on customers, “such as charging excessive fees, for basic information about their own accounts.”

Under a 2010 federal law, large banks and credit unions must “provide complete and accurate account information when requested by account holders.” As many large banks shift away from a relationship banking model “that prioritizes high levels of customer service, today’s advisory opinion clarifies that people are entitled to get the basic information they need without having to pay junk fees.”

CFPB Director Rohit Chopra said:

“While small relationship banks pride themselves on customer service, many large banks erect obstacle courses and impose junk fees to answer basic questions. While the biggest banks have abandoned the relationship banking model, federal law still requires them to answer certain customer inquiries completely, accurately, and in a timely manner.”

In the run-up to the 2008 financial crisis, large banks, along “with other financial institutions, failed to ensure consumers had access to full details about their accounts.”

As millions of homeowners struggled to pay their mortgages, many were unable to even determine which companies held their loans. When Congress instituted financial reforms in the Consumer Financial Protection Act, it “included a provision in Section 1034(c) requiring large banks and credit unions – those with more than $10 billion in assets – to provide account information that is in their control or possession, when it is requested by customers.”

When large financial institutions charge fees “to respond to those requests, they impede customers from obtaining the essential information they are entitled to under federal law.”

From its market monitoring and the public’s comments “about large banks’ customer service, the CFPB is aware that some large banks charge customers for basic information that is critical to fix problems with their bank account or to manage their finances.”

Banks give many different names to these fees. This guidance explains “how the CFPB will administer the legal requirement for large banks when it comes to customer service, including how the CFPB will evaluate fees imposed on customers for making reasonable requests, such as seeking original account agreements or information about recurring withdrawals from an account.”

The CFPB does not intend to seek monetary relief “for potential violations of Section 1034(c) that occur prior to February 1, 2024.”

The CFPB has been “pursuing a number of initiatives to preserve relationship banking in the United States and to ensure that consumers can obtain adequate customer service.”

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