7 On Your Side

Federal consumer bureau cracks down on 'junk fees,' encourages consumers to be on the lookout

Wednesday, April 19, 2023

The CFPB has oversight of financial institutions and says banks rake in $12 billion a year on credit card late fees -- and that's just the beginning.

SAN FRANCISCO (KGO) -- Junk fees have been getting the attention of lawmakers, elected officials and even President Biden during his recent State of the Union address.

"We'll ban surprise 'resort fees' that hotels tack on to your bill," President Biden said. "These fees can cost you up to $90 a night at hotels that aren't even resorts."

The President jump-started the process of identifying and doing away with junk fees.

President Biden went on, "Americans are tired of being played for suckers."

Congress is crafting new laws. The California legislature is too. Consumer activists are pulling out all the stops.

"The bottom line is, consumers deserve to know what they are paying for, how much and upfront. It is that simple," said Sander Kushen of the California Public Interest Research Group (CALPIRG).

While the spotlight has been turned on lawmakers now crafting laws, there is an actual crackdown now underway in the financial services industry.

"Americans are charged tens of millions -- excuse me, billions of dollars in fees each year by their financial service providers through things like late fees and overdraft," said Brian Shearer of the Consumer Financial Protection Bureau (CFPB).

The CFPB has oversight of financial institutions and says banks rake in $12 billion a year on credit card late fees -- and that's just the beginning.

"These include not-sufficient fund fees, bounce check fees, payment processing fees. You name it, and American consumers are fed up by this fee creep every year," Shearer said.

Many of the examples of fee creep you have seen yourself. Late fees going up, that sort of thing -- but there are also hidden and sneaky ways businesses find to reach into your pocket. Here's one that some homeowners faced.

"Another was fees for unnecessary property inspections," said Shearer. "There were companies that were paying a fee to inspect a property even though the inspector couldn't find the right address, and the company knew that they couldn't, and they just kept sending inspectors out to inspect nothing, and then charging a fee."

Sometimes these junk fees are only a few bucks so we brush them off, but the CFPB's Shearer says we shouldn't. "We're talking about big money. I think sometimes it's easy to look at junk fees and think that it's sort of playing small ball. But this is real money for real people that that affects people's pocketbooks," he said.

If you have been hit with an unfair fee, the Consumer Financial Protection bureau wants to hear about it... and so does 7 On Your Side. Use the form below to get in touch with the 7 On Your Side Team

Take a look at more stories and videos by Michael Finney and 7 On Your Side.

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