LANSING, Mich. (WLNS) — Attorney General Dana Nessel has joined the ranks of two multistate coalitions, aiming to eliminate overdraft fees and mortgage convenience fees that impact consumers.
“We know the costs of goods and services are at an all-time high,” Nessel said. “That’s why it’s more important than ever to fight against companies that charge fees that ultimately do more to hurt the customer than offset their own operating costs.”
Nessel, as well as a group of 17 other attorneys general, sent a letter to the CEOs of JPMorgan Chase, Bank of America, U.S. Bank and Wells Fargo to get rid of overdraft fees on user bank accounts.
The letter comes after the Feb. 24 announcement from Citigroup Inc. (“Citi”), establishing that it will remove
overdraft fees, returned item fees and overdraft protection fees by this summer.
Much like Citigroup Inc.’s declaration, a similar announcement was made late last year by Capital One that the bank holding company is committed to doing away with all overdraft and non-sufficient fund fees for its consumer banking customers.
“Charging overdraft fees that can sometimes be more than five times the amount of the original purchase is abhorrent,” Nessel said. “By eliminating these fees altogether, banks will show that they care as much for their customers’ financial well-being as they do their own.”
The letter cites a report from the Center of Responsible Lending, which found that consumers of color are disproportionately affected by overdraft fees.
Additionally, the Center also found that the costs incurred to banks by unfunded transactions are much lower than the fee that is charged.
“No person should ever be charged a $35 fee for a $5 cup of coffee,” said the letter.
Convenience Fees from Mortgage Servicers
The second coalition that Nessel joined is pushing for the Consumer Financial Protection Bureau (CFPB) to stop mortgage servicers from charging convenience fees.
Multiple issues are discussed in the letter, including the lack of consumer choice in mortgage servicers, the inability for consumers to change loan servicers as well as the absence of uniformity in mortgage servicer convenience fees.
The letter goes on to say that convenience fees that are implemented based on the consumer’s desired method of payment often operate as an ‘alternative late fee,’ which makes consumers choose the less expensive option and opt for the convenience fee.
The 23-member coalition encourages the CFPB to bar servicers from charging convenience fees that exceed the cost of processing a borrower’s payment, additionally asking that the CFPB require servicers to document their convenience fee costs.
“Convenience fees are exploitative and ultimately allow mortgage servicers to be paid twice. It is unfair that consumers face additional charges depending on how they decide to pay their bills,” Nessel said.