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CFPB Director is Obtuse on Fees

CFPB Director is Obtuse on Fees

The Consumer Financial Protection Bureau (CFPB) is seeking public input regarding what it termed “junk fees” that a number of different industries, such as financial services, entertainment and travel, charge consumers.

“Many financial institutions obscure the true price of their services by luring customers with enticing offers and then charging excessive junk fees,” said CFPB Director Rohit Chopra. “By promoting competition and ridding the market of illegal practices, we hope to save Americans billions.”

We are all for transparency, so we think it’s important, but we also think it’s important that in discussing such regulatory matters the focus be on the causes, as well as the effects.

The cause of the so-called “fee economy” that the CFPB and other regulatory agencies talk about has developed largely because regulatory agencies at the federal and state level over the decades continue to impose new regulations and policies that add new costs for businesses.

The effect of the regulatory imposition is the fee, so it’s interesting that the CFPB has decided to look at the effect it or other regulatory bodies may well have caused. After all, if not for new regulatory reporting requirements or regulatory policy implementations, many fees would not exist or be necessary.

We would add another point. The CFPB refers to “illegal practices” without being particularly clear on what that term refers to.  Almost certainly consumers don’t like the fees imposed as the result of regulatory requirements, but that doesn’t make them “illegal.”  A regulatory agency putting out a blanket statement about illegal activity – but then listing many legal practices – is unhelpful at best and deliberately misleading at worst. Such hotly charged rhetoric obscures the worthy goal of shining a light on the root causes of such fees and the effects they have on consumers and businesses alike.

January 27th, 2022

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