CFPB’s Chopra hints at changes to credit card rules

Rohit Chopra, director of the Consumer Financial Protection Bureau (CFPB) testified before the House Committee on Financial Services Wednesday, April 27, a day after attending a similar hearing before a Senate Banking Committee.

While Chopra’s written testimony was identical at both meetings, the responses provided in the House committee shed some light on some issues that had not been raised the previous day or not addressed in the statement. written.

Perhaps one of the most relevant topics on the CFPB agenda that was missing from the Senate hearing was the “junk fee” investigation. But Congresswoman Ann Wagner, in the first intervention of the afternoon, spent all her time on the subject, asking Chopra about the cost-benefit analysis of possible regulatory initiatives and the scope of the investigation. .

Chopra confirmed that long distance charges, while a concern for many businesses, were not part of the investigation. Yet, the same cannot be said for other fees like late fees, which can come under scrutiny.

Wagner also pushed Chopra to provide a definition of a “junk fee”. Chopra replied, “The way I define it is when there are charges that often don’t go through the full competitive process, and especially for services that you may never have requested or the cost of which far exceeds what a competitive market would provide. .”

This definition, however, could be considered subjective or, at the very least, would first require establishing which markets are not “subject to the full competitive process”, which is a whole new analysis for determining which fees are “junk fee”.

Chopra attempted to provide more information on what kind of fees the agency might be considering, suggesting that there is ‘fee drift’ and that people are often surprised by fees they don’t even know why. they are billed. This might suggest that fees established to offset a service, such as overdraft fees, may not be a priority in the CFPB’s analysis, but Chopra was ambiguous in his response.

Representative Carolyn Maloney asked Chopra about the credit card charges and the CFPB director said it was a priority for the agency, and he ordered his staff to see if the agency could reopen the rules of the CARD law to see if a change was necessary. “Certainly, late fees is an area I expect we’ll be seeking comment on, as it’s important for this market to be competitive.”

Another topic that Chopra only spent a few minutes on but, in her responses, revealed more than her written testimony was technology in finance. Asked about financial innovation by Representative Frank Lucas, Chopra said he was a big supporter of technology in finance because it helps reduce costs for consumers and businesses and provide better choices.

But he voiced his concerns: “I have one concern, I don’t want technology in financial services to be dominated by big tech companies like we see in China.” Chopra hinted that the CFPB will continue to work to isolate more competition and innovation in certain parts of the financial ecosystem, as there is a risk that some of these parts will be dominated by tech giants.

Read more: CFPB’s Chopra Tells Senators to Expect More on Big Tech, Repeat Offenders and Open Banking



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