March 8, 2023

CFPB: Research Uncovers Illegal Junk Fees on Bank Accounts, Mortgages, Student Loans, and Auto Loans

Many companies are updating practices and making consumers whole based on supervisory findings

Today, the Consumer Financial Protection Bureau (CFPB) released a special edition of its Supervisory Highlights that reports on unlawful junk fees uncovered in deposit accounts and in multiple loan servicing markets, including in mortgage, student, and payday lending. These unlawful fees corrode family finances, force up families’ banking and borrowing costs, and are not easily avoided – even by financially savvy consumers. As described in the Supervisory Highlights, the CFPB continues rooting unlawful fees out of consumer financial markets.

“For years, junk fees have been creeping across the economy,” said CFPB Director Rohit Chopra. “Our report describes a host of illegal junk fee practices that the CFPB has uncovered across the financial services sector.”

The CFPB’s examination and supervision program helps the agency identify illegal practices that are harming families, market competition, and law-abiding businesses. The CFPB publishes Supervisory Highlights reports to promote transparency and to stop potentially unlawful practices, as well as to help educate families, advocacy groups, and other law enforcement agencies about these practices.

The CFPB’s prior supervision work led the agency to issue guidance in October 2022, on the longstanding problem of surprise overdraft fees. As of today, after the CFPB’s focus on surprise overdrafts, at least 20 of the largest banks in the United States, which hold 62% of the volume of consumer deposit accounts subject to the CFPB’s supervisory authority, do not charge surprise overdraft fees. Additionally, banks that the CFPB has examined thus far will refund roughly $30 million to about 170,000 account holders who were assessed surprise overdraft fees.

This Supervisory Highlights special edition covers unlawful junk fees in the areas of bank account deposits, auto loan servicing, mortgage loan servicing, payday lending, and student loan servicing found during examinations between July 1, 2022, and February 1, 2023.

Deposit Accounts

CFPB examiners identified instances of depository institutions charging unlawful junk fees on consumer deposit accounts. Specifically, CFPB examiners found some financial institutions charged:

Auto Loan Servicing

Last year, the CFPB issued compliance guidance to the auto loan servicing industry in response to identified practices that included the illegal seizure of cars, sloppy record keeping, unreliable balance statements, and ransom for personal property contained within repossessed vehicles.

In the last six months, CFPB examiners found illegal servicing practices, particularly around the charging of unlawful fees, including hitting car owners with:

Mortgage Loan Servicing

In a previous edition of Supervisory Highlights, the CFPB identified illegal fees being charged in the mortgage servicing market, and, in November 2022, the CFPB took action against a mortgage servicer for cheating homeowners out of CARES Act rights.

CFPB examiners have identified old and new ways that mortgage servicers attempt to run-up unlawful fees that are charged to homeowners. Specifically, CFPB examiners found mortgage servicers charged:

Payday and Title Lending

The CFPB has highlighted multiple risks within the payday and title lending markets. Last year, the CFPB released a research report on free repayment plans offered in many states for payday loans that often go unused by borrowers. In July 2022, the CFPB filed a lawsuit against ACE Cash Express for concealing free repayment plans from its borrowers who ended up paying hundreds or thousands of dollars in unnecessary re-borrowing fees.

In this special edition of Supervisory Highlights, the CFPB reveals the ways that other short-term, high-cost payday and title loan lenders have been profiting off unlawful fees. Specifically, CFPB examiners found that payday and title lenders charged:

Student Loan Servicing

In the student loan servicing market, CFPB examiners found that servicers sometimes charged late fees and interest after payments were made on time. Specifically, the servicers’ policies did not allow borrowers to pay by credit card; however, sometimes their customer representatives erroneously accepted credit card payments. The servicers then cancelled the payments, and did not offer borrowers the chance to pay again. Instead, the servicers acted as if no payment had been made, and charged the borrowers late fees and additional interest.

Supervisory examinations review whether companies are complying with federal consumer financial protection law. When CFPB examiners uncover problems, they share their findings with companies to help them remediate violations. Typically, as with many of the instances identified within today’s report, companies take actions to fix the identified problems. For more serious violations or when companies fail to take corrective actions, the CFPB opens investigations for potential enforcement actions.

Read the Supervisory Highlights special edition.

Consumers can submit complaints about junk fees and about financial products and services, by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees who believe their companies have violated federal consumer financial protection laws, including by charging consumers unlawful fees, are encouraged to send information about what they know to To learn more about reporting potential industry misconduct, visit the CFPB’s website.

This post was originally published here.