The CFPB recently released Compliance Bulletin 2022-06 which focuses on fees charged to depositors when a deposited item is returned unpaid (aka a returned deposited item fee). The bulletin explains that the CFPB believes charging such fees “across the board” is likely an unfair practice. It states:
Blanket policies of charging Returned Deposited Item fees to consumers for all returned transactions irrespective of the circumstances or patterns of behavior on the account are likely unfair under the Consumer Financial Protection Act (CFPA).
The purpose of the Bulletin is to notify regulated financial institutions how the CFPB is looking to regulate such fees.
Given that the CFPB believes such fees are not reasonably avoidable and cause substantial injury, with no overriding benefit for consumers, the standards for an unfair act or practice are met. The CFPB does note, however, that institutions can likely avoid a UDAAP citation when charging these fees if they are charged only when a consumer would be able to reasonably avoid the injury. For example, if the fee is only charged when….
- Someone repeatedly deposits bad checks drawn on the same individual; or,
- A check is returned because it is unsigned.
Based on this Bulletin, you may want to reconsider this practice as it’s likely the amount of income generated isn’t worth the UDAAP risks involved.
Published
2022/11/14
