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**Saving Vulnerable Banking Customers Billions**

**** The CFPB's new guidance says that customers cannot be charged
for obtaining basic information about their accounts.

On Wednesday, the Biden-Harris administration introduced

new guidance and restrictions for "junk fees," the excess fees charged
by companies that are often hidden or undisclosed. My colleague Robert
Kuttner has covered the overall details
,
including the Federal Trade Commission's proposal to ban all hidden
junk fees that aren't revealed to consumers until after they commit to
purchasing the product or service. But part of the announcement included
a new CFPB guidance

that would require banks to provide consumers with basic account
information without being charged.

This guidance has been years in the making. In 2010, when Congress
passed the Consumer Financial Protection Act as part of the Dodd-Frank
reform, banks with more than $10 billion in assets were required to
provide account information when asked, but no further guidance or
enforcement has been issued in the decade since the law was passed. Last
year, the Consumer Financial Protection Bureau asked for public comment
on the quality of customer service at big banks, noting a trend in which
large banks are moving "toward algorithmic banking and away from
relationship banking." The announcement asked for public comment
regarding what information is useful to a consumer and how easy it is to
access that information, among other things.

Customers complained about struggling to obtain information, dealing
with customer service agents that bounced them around, and being charged
fees to ultimately access what they needed. Some of this information is
available on the bank's website or mobile app or through a chatbot,
but customers have to know how to navigate that process and find what
they need. As the CFPB pointed out in June
,
chatbots often do not have answers for individual accounts and often
create a dead end.

Of course, customers can eventually find the information, but they often
must pay a price to access the basics about their own money. "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," the CFPB wrote in the official
announcement, which was also released Wednesday. The agency is planning
to release a separate rule that would force banks to make switching
institutions easier, by requiring the sharing of information at the
request of the consumer.

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The CFPB's advisory opinion states that, generally, "requiring a
consumer to pay a fee or charge to request account information, through
whichever channels the bank uses to provide information to consumers, is
likely to unreasonably impede consumers' ability to exercise [their]
right." Examples of fees that likely unreasonably burden consumers
include those on checks of customer deposit balances, which are critical
to avoid overdrawing on an account. In addition, copies of past monthly
statements or check images, which could be necessary in determining
account balances and periodic payments, must be given for free, as well
as information regarding the payoff amount or interest rate of a loan
and other requests. The agency makes it clear that the technical name of
the fee is of little concern; if it unreasonably impedes the consumer,
it's probably illegal.

The CFPB lays out what information must be supplied, such as account
balances, transaction history, and forward steps for loan payoff. The
CFPB also issued guidance with regard to the timeliness of a response to
a request, and the "accuracy and completeness" of a request. The agency
notes many instances of requiring something from a consumer that do not
violate the law, such as identity verification and data security
measures.

The CFPB has already had success with one kind of junk fee which is
imposed on customers for making account withdrawals that are more than
their balance (known as "non-sufficient funds," or NSF). In an
accompanying report
,
the agency estimated that almost two-thirds of all larger banks with
over $10 billion in assets had eliminated NSF fees, accounting for about
97 percent of all NSF fee revenue. This has saved primarily low-income
customers almost $2 billion per year.

Junk fees are a thorn in the side of consumers. The Biden administration
has not only taken steps to eliminate junk fees in a variety of areas,
including consumer finance, but states have moved forward as well.
California Gov. Gavin Newsom this week signed a ban on junk fees

that are hidden from the consumer.

Many of these junk fees target travel and entertainment, like airfares,
hotel rooms, and concert tickets. But as others have noted
,
junk fees in consumer finance often impede low-income and marginalized
groups. Overall, customers lose an estimated $65 billion to these fees
on a yearly basis. By requiring banks to waive unnecessary fees, and
companies to fully disclose all fees up front, the Biden administration
is taking a step to put money back into people's pockets-money that
should have never left.

~ RAMENDA CYRUS, JOHN LEWIS WRITING FELLOW

Follow Ramenda Cyrus on Twitter

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