While fees imposed by bank and non-bank financial institutions can serve an important function by enabling these institutions to offer an array of financial products and services to their customers, these fees should not be excessive or exploitative. Unfortunately, many fees, especially those associated with overdraft and credit card products, are excessive compared to the actual costs to the financial institution of providing the product or service. In addition, those fees are often exploitative due to the captive nature of the banking relationship.

The Consumer Financial Protection Bureau has undertaken an effort to closely examine junk fees that are unfair and deceptive, issuing a Request for Information seeking stories, data, and information from the public on the impacts junk fees have had and continue to have on peoples’ lives. Better Markets, with support from Democracy Forward, submitted a response, articulating possible reforms that may be necessary to further protect consumers from predatory financial products and services.

Specifically, Better Market recommends that the CFPB address abusive fees by prescribing strong disclosure requirements; regulating hidden fees (including discriminatory fees) as unfair, deceptive, and abusive acts or practices; and banning or limiting acts or practices that result in excessive and exploitive fees. The comment also explains how the CFPB has the broad legal authority to regulate hidden fees.

Better Market’s Legal Director and Securities Specialist wrote in a statement, “Despite technological advances and the rise of automation in financial services that have lowered the costs of providing services and products to their customers, many financial institutions have not passed along those cost-savings to consumers or have cleverly disguised their products and services to rack up exorbitant fees at the expense of their customers. We applaud the CFPB for undertaking a close examination of junk fees with an eye toward possible reforms that may be necessary to further protect consumers from predatory financial products and services.”

Read the entire comment here.