Federal Consumer Watchdog is Upping Efforts to Crack Down on ‘Junk Fees’ at Banks

The Consumer Financial Protection Bureau on Wednesday said it issued guidance to end two particular bank fees that can catch customers by surprise — and are “likely unfair and unlawful,” according to the agency’s release. The move is the latest in the CFPB’s ongoing initiative to scrutinize junk fees, which generally are fees that are unexpected or excessive.

The new guidance first targets surprise overdraft fees, which can be as much as $36 each, the CFPB said. These fees can happen when a customer had enough money in their account to cover a debit charge at the time the bank authorized it, but then is charged an overdraft fee due to the timing of other charges hitting their account.

The second fee the CFPB addresses can happen when a customer deposits a check that ends up bouncing — despite the overdraft being due to the check writer’s insufficient funds. The charge is typically $10 to $19 per instance, according to the CFPB.

Already this year, many banks have been eliminating overdraft and non-sufficient funds fees or making their policies more consumer-friendly. The CFPB estimates those changes translate into $3 billion in savings for consumers.