As we have previously reported on this blog and discussed on our Consumer Finance Monitor Podcast, last year, the CFPB embarked on a campaign orchestrated by the Biden Administration to eliminate “junk fees.”  Yesterday, the CFPB issued three new items in connection with those efforts.  First, the CFPB issued a new advisory opinion on fees charged by large banks and credit unions subject to CFPB supervision (i.e., those with more than $10 billion in assets) to consumers who request account information.  Second, it issued a data spotlight showing that “the vast majority of NSF fees have been eliminated” by large banks.  Third, it issued a new edition of Supervisory Highlights focused on “junk fees.”  We will discuss the new edition of Supervisory Highlights in a separate blog post.  

Advisory opinion.  Apparently undaunted by the recent Texas federal court decision striking down the CFPB’s attempt to use its UDAAP authority to regulate discrimination, the CFPB has issued a new advisory opinion that interprets Section 1034(c) of the Consumer Financial Protection Act to prohibit large banks and credit unions from requiring a consumer a fee or charge to obtain account information.

Section 1034(c) provides that large banks and credit unions subject to CFPB supervision:

shall, in a timely manner, comply with a consumer request for information in the control or possession of such covered person concerning the consumer financial product or service that the consumer obtained from such covered person, including supporting written documentation, concerning the account of the consumer.  

In the advisory opinion, the CFPB states that Section 1034(c) grants consumers a right to request and receive account information that falls within the scope of the provision, and imposes a mandatory legal obligation on large banks and credit unions to respond to the consumer’s request and to provide such account information.  While the CFPB does not read Section 1034(c) to require large banks and credit unions “to provide information in any particular manner, or using any particular means,” it reads Section 1034(c) to prohibit large institutions from “impos[ing] conditions or requirements on consumers’ information requests that unreasonably impede[] consumers’ ability to request and receive account information.”  According to the CFPB:

Under the plain language of section 1034(c), if a consumer makes a “request for information in the control or possession of such covered person concerning the consumer product or service that the consumer obtained from such covered person” that does not fall within one of the covered exceptions, and a large bank or credit union refuses to provide that information unless the consumer satisfies an unreasonable condition, the bank or credit union has failed to “comply” with the request.  Section 1034(c) does not contain any language stating or suggesting that a large bank or credit union may impose conditions that unreasonably impede consumers’ information requests.  Such conditions, if permitted, would allow large banks and credit unions to frustrate and effectively nullify the right granted in section 1034(c).  And there is no reason to believe that Congress intended for section 1034(c) to allow that result.

Based on the above, the CFPB advises that “[a]s a general matter, requiring a consumer to pay a fee or charge to request account information, through whichever channels the bank uses to provide information to consumers, is likely to unreasonably impede consumers’ ability to exercise the right granted by section 1034(c), and thus to violate the provision.”   The CFPB interprets Section 1034(c), without regard to “how a large bank or credit union labels or characterizes a fee on its fee schedule or other documents, to “likely include[] charging fees (1) to respond to consumer inquiries regarding their deposit account balances; (2) to respond to consumer inquiries seeking the amount necessary to pay a loan balance; (3) to respond to a request for a specific type of supporting document, such as a check image or an original account agreement; and (4) for time spent on consumer inquiries seeking information and supporting documents regarding an account.”  The CFPB notes that it would generally not violate Section 1034(c) for a large bank or credit union to impose fees in certain limited circumstances, such as charging a fee to a consumer who repeatedly requested the same account information.

However, the CFPB fails to explain how Section 1034(c) differs from other federal consumer financial services laws that have been interpreted to permit the assessment of charges or fees.  For example, Section 161(b)(2) of the Truth in Lending Act gives consumers the right to request documentary evidence of an extension of credit appearing on their statements and the CFPB has interpreted it to permit creditors offering home equity lines of credit to charge a fee for such documentation as long as the fee is disclosed as an “other“ charge.  A fee for copies of documents requested for tax purposes is also permitted, by implication, and need not even be disclosed as an “other” charge in the Truth in Lending disclosures.  Similarly, Section 264(b) of the Truth in Savings Act requires a depository institution to disclose all fees that may be charged against the account and the CFPB has interpreted it to permit institutions to charge a fee for providing copies of checks to the consumer, as long as the fee is disclosed.  Photocopying fees for copies of other documents are also permitted, by implication, and need not be disclosed on the Truth in Savings disclosure form.  For that matter, the CFPB also fails to address the impact of Section 101(c)(1)(B)(iv)(ii) of the ESIGN Act, which permits consumers to request paper copies of any electronic record and permits the assessment of a fee for such copies as long as the fee is disclosed.    

Nonetheless, with no more textual support, the CFPB goes on to provide examples of other non-fee obstacles and conditions that could violate Section 1034(c) by unreasonably impeding consumers’ ability to make an information request.  According to the CFPB, “depending on the facts and circumstances,” such examples could include “forcing consumers to endure excessively long wait times to make a request to a customer service representative, requiring consumers to submit the same request multiple times, requiring consumers to interact with a chatbot that does not understand or adequately respond to consumers’ requests, or directing consumers to obtain information that the institution possesses from a third party instead.”

The advisory opinion also addresses what constitutes “timely compliance” with consumer information requests under Section 1034(c) and the need for responses to information requests to be “accurate” and “complete” but unfortunately it does so in a way that is likely to encourage frivolous or irrelevant requests as a delaying tactic in collections and in litigation.  With regard to timely compliance, the CFPB states that it “will consider the specific circumstances and nature of a particular request,” such as “the complexity of the request and/or the difficulty of response.”  Here, at least, the CFPB states that what constitutes a timely response under Section 1034(c) “may also be informed by the timing requirements of other Federal laws and regulations with which large banks and credit unions must comply,” such as timing requirements for mortgage servicers in Regulation X.

With respect to accuracy and completeness, the CFPB states:

[S]ection 1034(c) contemplates that large banks and credit unions will in fact provide consumers with the information they request to the extent it is in their control or possession.  A large bank or credit upon would violate section 1034(c) if it provided incomplete or inaccurate information in response to a consumer’s information request. 

Thus, according to the CFPB, there are no limitations on such requests with the possible exception of ones that might result from record retention programs.  The CFPB states that a large bank or credit union would not meet its obligation under Section 1034(c) to provide complete information if, for example, “the consumer asked for information about all of the consumer’s transactions with a given merchant since the account was opened, and the large bank or credit union possesses transaction information going back seven years, but its response provides only transaction information going back one year.”  A large bank or credit union would not meet its obligation under Section 1034(c) to provide accurate information if, for example, “a consumer asked the large bank or credit union the amount of a particular fee it charges for the consumer’s account…[and] it provided the wrong amount for that fee.”

Continuing to express concerns about technological innovation, the CFPB also notes that large banks and credit unions may violate Section 1034(c) “if they employ technologies that do not properly recognize consumer information requests or that provide inaccurate or incomplete information in response to those requests.”  The CFPB observes that “chatbots or other automated responses…in the absence of appropriate checks and quality assurance processes…can inadvertently misdirect inquiries or provide inadequate responses.”

In June 2022, the CFPB issued a request for information (RFI) seeking comments from the public “on what customer service obstacles consumers face in the banking market, and specifically what information would be helpful for consumers to obtain from depository institutions pursuant to Section 1034(c) of the [CFPA].”  In its background discussion of the new advisory opinion, the CFPB states that commenters on the RFI “relayed consumers’ frustration and difficulty in obtaining current information about their accounts.  The CFPB’s invocation of Section 1034(c) to prohibit fees and address what the CFPB has called the movement “away from a traditional relationship banking model with an emphasis on providing customized help to individuals,” appears to be yet  another example of the agency’s willingness to ignore or stretch the statutory text and expansively interpret the CFPA to pursue its priorities. 

Data spotlight.  According to the CFPB, its new data shows:

• Nearly two-thirds of banks with over $10 billion in assets have eliminated NSF fees.
• Nearly three-fourths of the banks that earned the most in overdraft/NSF fee revenue in 2021, including 27 of the top 30 earners, have eliminated NSF fees.
• Among credit unions with over $10 billion in assets, 16 of 20 continue to charge NSF fees, including four of the five largest.

The CFPB estimates:

• Among banks with over $10 billion in assets, 97% of NSF fee revenue has been eliminated.
• Among the 75 banks earning the most overdraft/NSF fee revenue in 2021, 95% of NSF fee revenue has been eliminated.
• As a result of the elimination of NSF fees at these banks, consumers are saving almost $2 billion annually on a going forward basis.

The CFPB also finds that generally, larger banks have been more likely to eliminate NSF fees. All banks with over $75 billion in assets and all but seven of the 63 banks with over $25 billion in assets have eliminated NSF fees.  The CFPB states that it will continue to monitor NSF fee practices in the market.

In its most recent rulemaking agenda, the CFPB indicated that it is continuing to consider new rules regarding NSF fees.  We hope the CFPB will reassess the need for new rules on NSF fees in light of the new data.

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