Rules Not Releases
Yesterday, the Consumer Financial Protection Bureau (CFPB) issued an advisory on what it calls “junk fees.” AFSA has long been engaged on this issue and has argued that the pejorative term “junk fees,” while sure to get headlines, fundamentally misunderstands how the consumer credit market operates and in many cases mis-portrays to consumers and the media what those fees address.
In February, AFSA wrote on CFPB and Federal Trade Commission (FTC) proposals the agencies claimed would control so-called “junk fees.” The FTC must follow certain specific guidelines for trade rules that declare an act or practice unfair or deceptive. In the FTC’s Advanced Notice of Proposed Rulemaking (ANPR), the line of questioning shows that it is engaging in a fishing expedition, rather than clear and appropriate rulemaking. In that same time frame, the CFPB proposed a rule specifically targeting credit card late fees that dismissed the crucial role of deterrence such late fees play in serving the best interest of consumers.
In July, AFSA filed comments for the subcommittee hearing entitled, Taking Account for Fees and Tactics Impacting Americans’ Wallets regarding fees on installment loans.
As we’ve noted, financial institutions want to serve their customers and provide them with credit products and services that provide benefits. As even the CFPB notes, many financial institutions have adjusted eliminated fees for non-sufficient funds, saving consumers an estimated $2 billion every year.
In short, the industry wants to be both a good corporate citizen and serve their customers. But clear rules of the road set through the well-established rulemaking process – not simply promulgated via press release – would best serve all parts of the marketplace.
October 12th, 2023
