CFPB Issues Guidance Clarifying Large Bank Customer Service Obligations and Prohibition on Junk Fees | Practical Law

CFPB Issues Guidance Clarifying Large Bank Customer Service Obligations and Prohibition on Junk Fees | Practical Law

The Consumer Financial Protection Bureau (CFPB) issued an advisory opinion regarding large bank customer service requirements including a prohibition on charging consumers excessive fees for seeking information about their accounts.

CFPB Issues Guidance Clarifying Large Bank Customer Service Obligations and Prohibition on Junk Fees

by Practical Law Finance
Published on 11 Oct 2023USA (National/Federal)
The Consumer Financial Protection Bureau (CFPB) issued an advisory opinion regarding large bank customer service requirements including a prohibition on charging consumers excessive fees for seeking information about their accounts.
On October 11, 2023, the Consumer Financial Protection Bureau (CFPB) issued an advisory opinion regarding section 1034(c) of the Consumer Financial Protection Act (CFPA) which requires certain large financial institutions to provide complete and accurate account information when requested by accountholders without imposing unreasonable obstacles such as by charging excessive fees. The guidance notes that a consumer’s request for information under section 1034(c) can lead to the identification and resolution of errors by a financial institution involving a consumer’s account. Responding to consumer requests for information is critical for ensuring high levels of customer service and enabling consumers to resolve issues with their accounts when they encounter problems.
According to the CFPB:
  • Some large financial institutions have moved away from a traditional relationship banking model that emphasized providing customized help to individuals.
  • Individualized service is now generally reserved for high net-worth individuals.
  • Large financial institutions frequently rely on highly standardized processes, rather than high-quality human interactions or digital channels that actually facilitate self-help.
  • Consumers with questions or problems typically cannot go to an individual at a financial institution who is familiar with their account and instead must:
    • navigate a phone tree to a call center;
    • search through largely irrelevant website material; or
    • attempt to get answers from a chatbot.
In a press release announcing the guidance, CFPB Director Rohit Chopra stated "While small relationship banks pride themselves on customer service, many large banks erect obstacle courses and impose junk fees to answer basic questions. While the biggest banks have abandoned the relationship banking model, federal law still requires them to answer certain customer inquiries completely, accurately, and in a timely manner."
The guidance reiterates the mandate of section 1034(c): that subject to enumerated exceptions, large banks and credit unions “shall, in a timely manner, comply with a consumer request for information in the control or possession of [the large bank or credit union], concerning the consumer financial product or service that the consumer obtained from [the large bank or credit union], including supporting written documentation, concerning the account of the consumer.”
According to the guidance:
  • Examples of account information that must be provided upon request include:
    • information that appears on periodic statements or on online account portals, such as deposit account balances, the interest rate on a loan or credit card, and transaction history;
    • information regarding bill payment and other recurring transactions, such a list of all scheduled payments out of the account;
    • terms and conditions of an account, including a schedule of fees that may be charged; and
    • information about the status of a lien on real property that was released, or should have been released, years before.
  • Examples of “supporting written documentation” include:
    • past periodic statements or check images; and
    • copies of account agreements, including original signed contracts).
  • “In control or possession” of the financial institution includes information:
    • known by its employees;
    • found in its electronic or paper files; or
    • which the financial institution has the legal right, authority, or practical ability to obtain, such as information held by an affiliate or service provider.
Under section 1034(c) financial institutions may not impose conditions or requirements on consumer information requests that unreasonably impede consumers' ability to request and receive account information. According to the guidance, conditions that would not unreasonably impede a consumer's ability to obtain information include requiring the consumer to:
  • Verify their identity, account, or describe the information they are seeking.
  • Comply with reasonable data security measures.
However, the guidance notes the following conditions that would generally unreasonably impede a consumer’s ability to obtain information:
  • Requiring a consumer to pay a fee or charge to request account information, through whichever channels the bank uses to provide information to consumers, including charging fees:
    • to respond to consumer inquiries regarding their deposit account balances;
    • to respond to a request for a specific type of supporting document, such as a check image or an original account agreement; or
    • for time spent on consumer inquiries seeking information and supporting documents regarding an account.
  • 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.
  • Directing consumers to obtain information that the institution possesses from a third party instead.