Two CFPB reports find more fee surprises

The Consumer Financial Protection Bureau this week published two reports that show fees on financial products continue to shock consumers. Overdraft and non-sufficient funds fees still trouble vulnerable households. Excess charges from some college-marketed financial products still don’t appear to be in the best interest of students.

In building on its continued research on overdraft and non-sufficient funds (NSF) fees, the Bureau reported that some consumers said they were surprised when financial institutions charged them overdraft fees or non-sufficient funds (NSF) fees. According to the report, which analyzed consumer credit data along with consumer experiences reported in its Making Ends Meet survey, of those consumers in households charged an overdraft fee in the past year, “43 percent were surprised by their most recent account overdraft, 35 percent thought it was possible, and just 22 percent expected it.” Of those consumers in households charged an NSF fee, the CFPB reported that “39 percent were surprised by their most recent NSF fee, 33 percent thought it was possible, and just 28 percent expected it.”

This report also evaluated how often consumers incur overdraft and NSF fees, and the connection between consumers’ experiences with these fees to their socioeconomic and demographic characteristics and their financial well-being.

A second report shows that colleges are profiting from fees on financial products in their partnerships with third-party financial services providers. The Bureau released recent findings on financial products, such as deposit accounts, prepaid cards, and credit cards that colleges market to their students. According to the CFPB, colleges generated over $17 million in revenue from over 650,000 student bank accounts in 2021-2022.

By regulation, schools must ensure that deposit accounts are in students’ “best financial interests.” Yet, the Bureau found that some financial entities are charging students fees, such as overdraft fees, while many financial institutions have stopped or reduced similar fees. This study, which is the 14th annual report to Congress on college credit cards under the CARD Act, also found that students at Historically Black Colleges and Universities (HBCUs), for-profit colleges, and Hispanic-servicing institutions (HSIs) are all paying higher-than-average fees per account.

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