TLDR

The Consumer Financial Protection Bureau (CFPB) has proposed a ban on banks charging non-sufficient funds fees on instantly declined transactions. The CFPB’s campaign against “junk fees” aims to protect consumers from unnecessary charges.

Key Points:

• The CFPB has proposed a ban on banks charging non-sufficient funds fees on instantly declined transactions.
• The bureau is campaigning against “junk fees” and wants to protect consumers from unnecessary charges.

Under the proposed rule, banks would not be allowed to charge non-sufficient funds fees when a transaction is instantly declined due to insufficient funds in the customer’s account. While such fees are rarely charged by banks, the CFPB wants to prevent the possibility of them in the future.

The CFPB has also proposed other measures to curb “junk fees,” including limiting overdraft fees and credit card late fees. The bureau considers these fees to be unfair and deceptive practices.

Instant payments have become more common as consumers shift away from cash and paper checks towards mobile apps and fintech services like Venmo and PayPal. The Federal Reserve’s launch of FedNow earlier this year enables banks and credit unions to process instant payments, suggesting that this trend will continue.

The proposed rule follows the CFPB’s previous proposal to limit overdraft fees to as low as $3 and credit card late fees to $8.

The CFPB is actively working to protect consumers from excessive fees and unfair practices that can harm their financial wellbeing.