The death knell for junk fees has sounded. There are emerging compliance risks surrounding junk fees that are gaining steam in Washington. While not new, the intensity or vigor of the current administrations’ pursuit of crimes (in their estimation) is increasing. Below is a link to two ABA article summaries which just came out on this topic.
The primary issue from a compliance standpoint is that activities which were considered legitimate yesterday are now crimes today. Banks are not being given any opportunity to react, which often leads to extensive hours determining who has been harmed and of course reimbursements. Not to mention the black mark a UDAAP violation has on the regulators view of the effectiveness of a Compliance Management System.
The CFPBs stance on these topics inevitably flow down to the Agencies. We believe it is prudent at this time to assess your fee schedules and application methodologies for potential risks. In addition, it is important to report to management i.e., your Compliance or Audit Committee and Board, of this emerging risk and the impact it will have on your organization.
TCA will continue to monitor and or inquire with the CFPB and Agencies for clarifications on their expectations and provide updates and guidance.
White House pushes state policymakers to restrict ‘junk fees’ | ABA Banking Journal
Remember TCA is A Better Way to comply and get updated on regulatory changes. Contact us at [email protected] or (800) 934-7347.
