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President Joe Biden, along with Federal Trade Commission Chair Lina Khan and Consumer Financial Protection Bureau Director Rohit Chopra, will reveal new policy proposals from the two agencies aimed at banning junk fees in certain sectors.
The FTC's rule proposal would prohibit businesses from burying fees within a transaction and force them to present the amount and purpose of surcharges, upfront — potentially saving consumers over $10 billion over the next decade, according to a release. Under the rule, the commission would be able to secure refunds for consumers if the mandate is violated.
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The CFPB is targeting big banks by highlighting consumers' rights to access complete, accurate and free account information upon request according to a 2010 federal law.
"When people request basic information about their accounts, big banks cannot charge them massive fees or trap them in endless customer service loops," Chopra told reporters on Tuesday. "Charging a competitive price for a legitimate service makes sense but charging junk fees for basic customer responsiveness doesn't.
The CFPB has slapped Wells Fargo, Bank of America and Regions Bank with fines, citing extraneous overdraft fees or overcharges in recent years. Further, to address big banks' monopoly, the bureau will issue a proposal later this month to require financial companies to allow the easy transfer of customers' banking transaction data to competitors.
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Both the FTC and the CFPB have taken preliminary actions toward cracking down on junk fees over the past few months. Earlier this year, the CFPB released a rule proposal on excessive credit card fees, while the FTC began targeting unfair practices in ticketing and other fees in late 2022.
The commission will consider a final rule after a 60-day comment period, according to a senior administration official.
Oct 31 (Reuters) - The Biden administration on Tuesday will seek to impose new rules on retirement plan providers to close loopholes that officials argue allow the industry to sell products that boost their revenue at the expense of customers, the latest effort by the administration to crack down on so-called junk fees.
The proposed Labor Department rules require retirement plan providers to only sell commodities and insurance products, such as annuities, to clients when doing so is in the customer's best interest.
New Biden target in junk fee crackdown: retirement advisers
The Biden administration on Tuesday will seek to impose new rules on retirement plan providers to close loopholes that officials argue allow the industry to sell products that boost their revenue at the expense of customers, the latest effort by the administration to crack down on so-called junk...www.reuters.com
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"Any corporation that has not brought their prices back down, even as inflation has come down, even as the supply chains have been rebuilt, it's time to stop the price gouging," Biden said at the launch of a new White House supply chain initiative. "Give the American consumer a break."
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Prices for some everyday goods have fallen over the past year, a reality reflected in lower Thanksgiving costs this year, for example. And lower costs have in turn left some consumers with more money in their budgets for things like Black Friday shopping, when U.S. online sales rose 7.5% this past weekend over a year ago.
As Biden runs for reelection, the White House has sought to claim these broad spending and pricing trends as victories for the president and his economic agenda, dubbed Bidenomics.
But the argument that Biden deserves the credit for a strong economic recovery has proven to be a tough sell to voters, who consistently give the president low marks on the economy.
"We understand that people are still not feeling it, we get that," White House press secretary Karine Jean-Pierre said Monday, ahead of the president's supply chain event.
Faced with a skeptical audience, targeting so-called junk fees, which Biden said "companies sneak into your bill," offers the White House with a chance to directly show voters what Biden is doing on their behalf.
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The Consumer Financial Protection Bureau plans to dramatically slash overdraft fees at the largest banks by classifying overdraft services as extensions of credit and allowing financial institutions to recoup their costs or agree to charge a maximum fee of $14 under a benchmark set by the government.
Under a proposal to be released Wednesday, the CFPB plans to radically change how overdraft fees are calculated and charged by financial institutions that have more than $10 billion in assets. Banks and credit unions with less than $10 billion in assets would be exempt from the proposed rule.
Two years after many large banks eliminated or dropped overdraft and nonsufficient fund fees, the CFPB wants overdraft services to be classified as an extension of credit, subject to the same consumer protections as credit cards under the Truth in Lending Act that requires disclosures of annual percentage rates.
CFPB Director Rohit Chopra said that what began more than a half-century ago with banks offering overdraft services as a convenience to customers when bills were paid with paper checks has morphed into what he called "a junk fee harvesting machine." ...
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The CFPB is seeking public comment by April 1. A final overdraft rule is expected to go into effect Oct. 1, 2025, due to TILA requirements.
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A Texas judge has recused himself from a case challenging the Consumer Financial Protection Bureau's $8 credit card late fee rule.
On Thursday, U.S. District Judge Reed O'Connor recused himself from the case in which the U.S. Chamber of Commerce and five other trade groups are seeking to halt the late fee rule from going into effect.
The CFPB has accused the trade groups of "forum shopping" for filing the case in the U.S. District Court for the Northern District of Texas, where judges are considered favorable to industry.
Judge Mark T. Pittman, a Trump appointee, replaced Judge O'Connor, and is expected to decide soon whether to grant the trade groups a preliminary injunction to keep the late fee rule from going into effect. ...
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The litigation over $10 billion in late fee revenue is expected to be decided soon, in part, because the CFPB has already been found to be unconstitutional in the U.S. Court of Appeals for the 5th Circuit that covers Texas, Louisiana and Mississippi. In 2022, three judges on the 5th Circuit ruled that the CFPB's funding structure violates the Constitution's structural separation of powers.
The Supreme Court is expected to rule by June on whether the bureau's funding structure is unconstitutional, and Judge Pittman could stay the rule until that decision, which is expected by June at the latest.
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