Some banks that charged multiple nonsufficient funds fees on a single item plan to refund the fees to consumers, and most of these institutions supervised by the Consumer Financial Protection Bureau have decided to eliminate nonsufficient funds fees altogether, the CFPB said in a statement yesterday.

The CFPB released the statement to announce a special edition of its Supervisory Highlights report focusing on “junk fees,” unexpected fees that inflate costs for consumers. The agency said it had found “unlawful junk fees” on deposit accounts, including NSF fees, and institutions servicing mortgages, student loans, auto loans and payday loans.

The CFPB said the agency found these fees during examinations conducted between July 1, 2022, and February 1, 2023.

“For years, junk fees have been creeping across the economy,” CFPB Director Rohit Chopra said in the statement. “Our report describes a host of illegal junk fee practices that the CFPB has uncovered across the financial services sector.”

Examinations found that when a consumer’s account had an insufficient balance, institutions would charge customers multiple NSF fees for a single item, as soon as the next day. These institutions plan to reimburse consumers, the CFPB said. The agency added that examiners have reviewed NSF fees at numerous institutions, and a majority have decided to eliminate NSF fees altogether.

The CFPB also called overdraft fees unfair when a financial institution authorized a debit when an account had a positive balance and then charged an overdraft fee because of intervening transactions that were processed before the debit settled.

“Account holders could not reasonably avoid these surprise fees, irrespective of account disclosures,” the CFPB said.

The CFPB’s report follows guidance issued in October 2022 on surprise overdraft fees. The CFPB said at least 20 of the largest U.S. banks – representing 62 percent of the volume of consumer deposit accounts subject to the CFPB’s supervisory authority – no longer charge this type of overdraft fee.

Banks examined so far by the CFPB plan to refund approximately $30 million to about 170,000 account holders who were assessed the surprise overdraft fees, the CFPB said.

The CFPB also pointed to fees at mortgage servicers, including late fees that exceeded the amount allowed in a contract, fees for property inspection visits when an address was known to be incorrect, and private mortgage insurance premiums for homeowners who did not owe a monthly premium.

Other industries have also been targeted for charging junk fees, including airlines, hotels, hospitals and entertainment ticket sales.

The White House brought together state lawmakers, federal officials and others Wednesday to trade ideas about how to fight junk fees.

The virtual meeting comes after President Joe Biden said in February that his administration would work with state and local officials to identify ways to crack down on such fees.

Chopra encouraged state lawmakers to use consumer protection laws already on the books.

“States can enforce a prohibition on certain abusive acts or practices,” Chopra said. “These words might seem like obscure legal concepts, but they’re really about making sure there’s fair market dealing that prices are upfront and clearly disclosed, but also that consumers have a chance to avoid those fees if they don’t actually want that service.”

Material from The Associated Press was used in this report.