71534 Federal Register / Vol. 88, No. 199 / Tuesday, October 17, 2023 / Notices 

1Banks’ Overdraft/NSF Fee Revenues Evolve 

Along With Their Policies, (July 20, 2023), available 

at: https://www.consumerfinance.gov/about-us/ 

blog/banks-overdraft-nsf-fee-revenues-evolve-alongwith-their-policies/. Some banks have announced 

significant changes while others have made smaller 

or no changes. 

2 Id. 

3 If a supervisory matter is referred to the Office 

of Enforcement, Enforcement may cite additional 

violations based on these facts or uncover 

additional information that could impact the 

conclusion as to what violations may exist. 

4 12 U.S.C. 5531(c), 5536. 

5Some depository institutions charge a NSF fee 

when a consumer pays for a transaction with a 

check or an ACH transfer and the transaction is 

presented for payment, but there is not a sufficient 

balance in the consumer’s account to cover the 

transaction. 

A third interim extension under 35 

U.S.C. 156(d)(5) of the term of U.S. 

Patent No. 7,199,162 was granted on 

October 10, 2023, for a period of one 

year from the twice-extended expiration 

date of the ‘162 patent. 

Brian Hanlon, 

Acting Deputy Commissioner for Patents, 

United States Patent and Trademark Office. 

[FR Doc. 2023–22836 Filed 10–16–23; 8:45 am] 

BILLING CODE 3510–16–P 

CONSUMER FINANCIAL PROTECTION 

BUREAU 

Supervisory Highlights Junk Fees 

Update Special Edition, Issue 31, Fall 

2023 

AGENCY: Consumer Financial Protection 

Bureau. 

ACTION: Supervisory Highlights. 

SUMMARY: The Consumer Financial 

Protection Bureau (CFPB or Bureau) is 

issuing its thirty first edition of 

Supervisory Highlights. 

DATES: The findings included in this 

report cover examinations in the areas 

of deposits, auto servicing, and 

remittances that generally were 

completed between February 2023 and 

August 2023. The report also describes 

risks identified in connection with 

payment platforms that parents, 

guardians, and students use to pay for 

school lunches. 

FOR FURTHER INFORMATION CONTACT: 

Jaclyn Sellers, Senior Counsel, at (202) 

435–7449. If you require this document 

in an alternative electronic format, 

please contact CFPB_Accessibility@

cfpb.gov. 

SUPPLEMENTARY INFORMATION: 

1. Introduction 

As part of its emphasis on fair 

competition, the Consumer Financial 

Protection Bureau (CFPB) has launched 

an initiative, consistent with its legal 

authority, to scrutinize junk fees 

charged by banks and financial 

companies. Junk fees are typically not 

subjected to the normal forces of 

competition, leading to excessive costs 

for services that a consumer may not 

even want. For example, certain banks 

and financial companies might hide 

these unavoidable or surprise charges or 

disclose them only at a later stage in the 

consumer’s purchasing process, if at all. 

The CFPB has observed that 

supervised institutions have started to 

compete more when it comes to fees. In 

recent years, multiple banks have 

announced they were eliminating 

overdraft fees or otherwise updating 

their policies to be more consumer 

friendly.1 And many have announced 

that they are eliminating non-sufficient 

fund (NSF) fees on consumer deposit 

accounts.2

Supervision continues to focus 

significant resources on identifying and 

eliminating junk fees charged by 

supervised institutions. Significantly, 

financial institutions are refunding over 

$120 million to consumers for 

unanticipated overdraft fees and unfair 

NSF fees. This special edition of 

Supervisory Highlights updates the 

public on supervisory work completed 

since the CFPB published the March 

2023 Supervisory Highlights Junk Fees 

Special Edition. In total, for the topics 

covered in this edition, Supervision’s 

work has resulted in institutions 

refunding over $140 million to 

consumers. 

The findings included in this report 

cover examinations in the areas of 

deposits, auto servicing, and 

remittances that generally were 

completed between February 2023 and 

August 2023.3 The report also describes 

risks identified in connection with 

payment platforms that parents, 

guardians, and students use to pay for 

school lunches. Additionally, consistent 

with the statutory requirement for 

Supervision to identify and consider 

‘‘risks to consumers’’ throughout its 

supervisory program, Supervision has 

obtained data about certain deposit 

account fee practices and is sharing key 

data points that shed light on risks to 

consumers. To maintain the anonymity 

of the supervised institutions discussed 

in Supervisory Highlights, references to 

institutions generally are in the plural 

and related findings may pertain to one 

or more institutions. 

We invite readers with questions or 

comments about Supervisory Highlights 

to contact us at CFPB_Supervision@

cfpb.gov. 

2. Supervisory Observations 

2.1 Deposits 

In recent examinations of depository 

institutions and service providers, 

Supervision has reviewed certain fees 

related to deposit accounts to assess 

whether supervised entities have 

engaged in any unfair, deceptive, or 

abusive acts or practices (UDAAPs) 

prohibited by the Consumer Financial 

Protection Act of 2010 (CFPA).4

Examiners have focused on NSF and 

overdraft fees in particular and have 

reviewed statement fees and surprise 

depositor fees as well. Examiners also 

have engaged in follow-up work 

regarding pandemic relief benefits. 

2.1.1 Assessing Multiple NSF Fees for 

the Same Transaction 

Supervision continued examinations 

of institutions to review for UDAAPs in 

connection with charging consumers 

NSF fees, especially with respect to ‘‘representments.’’ 5 A re-presentment 

occurs when, after declining a 

transaction because of insufficient funds 

and assessing an NSF fee for the 

transaction, the consumer’s accountholding institution returns the 

transaction to the merchant’s depository 

institution, and the merchant presents 

the same transaction to the consumer’s 

account-holding institution for payment 

again. In some instances, when the 

consumer’s account remains insufficient 

to pay for the transaction upon representment, the consumer’s accountholding institution again returns the 

transaction to the merchant and assesses 

another NSF fee for the transaction, 

without providing consumers a 

reasonable opportunity to prevent 

another fee after the first failed 

presentment attempt. Absent 

restrictions on the assessment of NSF 

fees by the consumer’s account-holding 

institution, this cycle can occur 

multiple times, and consumers may be 

charged multiple fees for a single 

transaction. 

Core Processor Practices 

Core processors provide critical 

deposit, payment, and data processing 

services to many supervised 

institutions, and the system 

functionality that these entities develop 

drives many fee practices, including 

NSF fee practices. Supervision has 

examined core processors in their 

capacity as service providers to covered 

persons providing deposit services. 

Examiners concluded that, in the 

offering and providing of core service 

platforms, core processors engaged in an 

unfair act or practice by contributing to 

the assessment of unfair NSF fees on represented items. An act or practice is 


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6 12 U.S.C. 5531(c), 5536. 

7Supervision’s work is consistent with the 

CFPB’s public action against Bank of America, N.A. 

See CFPB Consent Order 2023–CFPB–0006, In the 

Matter of Bank of America, N.A. (July 11, 2023), 

available at: https://www.consumerfinance.gov/ 

enforcement/actions/bank-of-america-n-a-fees/. 

8Responsible Business Conduct: Self-Assessing, 

Self-Reporting, Remediating, and Cooperating, 

(March 6, 2020), available at: https:// 

www.consumerfinance.gov/compliance/ 

supervisory-guidance/bulletin-responsible-businessconduct/. 

9Supervisory Highlights: Junk Fees Special 

Edition, Issue 29, 3–6 (March 2023) available at: 

https://www.consumerfinance.gov/data-research/ 

research-reports/supervisory-highlights-junk-feesspecial-edition-issue-29-winter-2023/; Consumer 

Financial Protection Circular 2022–06, 

Unanticipated Overdraft Fee Assessment Practices, 

at 8–12 (Oct. 26, 2022) available at: https://

www.consumerfinance.gov/compliance/circulars/ 

consumer-financial-protection-circular-2022-06- 

unanticipated-overdraft-fee-assessment-practices/. 

10See 12 U.S.C. 5515(b)(1). 

11Neither the account-level nor the transactionlevel data contain any directly-identifying personal 

information. Because the data used in this analysis 

are Confidential Supervisory Information, this 

discussion only presents results that are aggregated 

and does not identify specific institutions. 

unfair when: (1) it causes or is likely to 

cause substantial injury to consumers; 

(2) the injury is not reasonably 

avoidable by consumers; and (3) the 

injury is not outweighed by 

countervailing benefits to consumers or 

to competition.6 Consumers incurred 

substantial injury in the form of the 

relevant re-presentment NSF fees. 

Consumers were also at increased risk of 

incurring additional fees on subsequent 

transactions caused by the representment NSF fees, which lowered 

consumers’ account balances. Injurious 

fees were foreseeable in light of the 

system limitations, as the core processor 

platforms did not allow financial 

institutions to refrain from charging 

more than one NSF fee per item without 

discontinuing NSF fees altogether or 

manually waiving individual fees. 

These fees were not reasonably 

avoidable by consumers, where 

consumers did not have a meaningful 

opportunity to prevent another fee after 

the first failed representment attempt. 

The consumer injury at issue was not 

outweighed by countervailing benefits 

to consumers or competition. 

To address these findings, the core 

processors enhanced the systems they 

provide to financial institutions to 

facilitate their implementation of 

policies to eliminate NSF representment fees. Additionally, 

Supervision intends to review the 

practices of financial institutions 

seeking payment from the consumer’s 

financial institution, often called 

Originating Depository Financial 

Institutions, to ensure that represented 

transactions are coded properly to 

enable systems to identify the relevant 

transactions efficiently as well as refrain 

from charging NSF fees on those 

transactions. 

Supervised Institutions’ Practices 

In other examinations, Supervision 

found that financial institutions engaged 

in unfair acts or practices by charging 

consumers re-presentment NSF fees 

without affording the consumer a 

meaningful opportunity to prevent 

another fee after the first failed 

representment attempt.7 The assessment 

of re-presentment NSF fees caused 

substantial monetary injury to 

consumers, totaling tens of millions of 

dollars that will be refunded to 

consumers because of examinations 

during this time period. These injuries 

were not reasonably avoidable by 

consumers, regardless of disclosures in 

account-opening documents, because 

consumers did not have a reasonable 

opportunity to prevent another fee after 

the first failed presentment attempt. 

And the injuries were not outweighed 

by countervailing benefits to consumers 

or competition. 

Consistent with the CFPB’s longtime 

position regarding responsible business 

conduct, institutions proactively 

developed plans to remediate 

consumers for assessed re-presentment 

NSF fees.8 However, some financial 

institutions used incomplete reports 

that only captured certain representment NSF fees charged to 

consumers. Examiners found that these 

reports captured consumer accounts 

that were charged NSF fees on checks 

only, or on both checks and ACH 

transactions. Yet they omitted consumer 

accounts that were assessed NSF fees 

solely on ACH transactions. After 

examiners identified this issue, 

institutions reviewed their remediation 

methodologies to ensure coverage of 

both ACH and check re-presentments. 

In total, institutions are refunding 

over $22 million to consumers in 

response to Supervision directives since 

CFPB initiated this set of work in 2022. 

Additionally, the vast majority of 

institutions reported plans to stop 

charging NSF fees altogether. 

2.1.2 Unfair Unanticipated Overdraft 

Fees 

Supervision continued to cite unfair 

acts or practices at institutions that 

charged consumers for unfair 

unanticipated overdraft fees, such as 

Authorize-Positive Settle-Negative 

(APSN) overdraft fees, during this time 

period. APSN overdraft fees occur when 

financial institutions assess overdraft 

fees for debit card or ATM transactions 

where the consumer had a sufficient 

available balance at the time the 

consumer authorized the transaction, 

but given the delay between 

authorization and settlement the 

consumer’s account balance is 

insufficient at the time of settlement. 

This change in balance can occur for 

many reasons, such as intervening 

authorizations resulting in holds, 

settlement of other transactions, timing 

of presentment of the transaction for 

settlement, and other complex practices 

relating to transaction processing order. 

Supervision’s recent matters have built 

on work described in Winter 2023 

Supervisory Highlights, and the CFPB 

previously discussed this practice in 

Consumer Financial Protection Circular 

2022–06, Unanticipated Overdraft Fee 

Assessment Practices.9

Across its examinations, Supervision 

has identified tens of millions of dollars 

in injury to thousands of consumers that 

occurred whether supervised 

institutions used the consumer’s 

available or ledger balance for fee 

decisioning. Consumers could not 

reasonably avoid the substantial injury, 

irrespective of account opening 

disclosures. The consumer injury was 

not outweighed by countervailing 

benefits to consumers or competition. 

To remedy the violation, these 

institutions ceased charging APSN 

overdraft fees, and will conduct a 

lookback and issue remediation to 

injured consumers. 

In total, financial institutions are 

refunding over $98 million to 

consumers since this work began in 

2022. In recent examinations, and 

consistent with Supervision’s earlier 

work, supervised institutions that had 

reported to examiners that they engaged 

in APSN overdraft fee practices now 

report that they will stop doing so. 

2.1.3 Supervisory Data Requests on 

Overdraft, NSF, and Other OverdraftRelated Fees 

As part of the CFPB’s ongoing 

supervisory monitoring related to 

overdraft practices, Supervision 

obtained data from several institutions 

related to fees assessed over the course 

of 2022, including per item overdraft 

and NSF fees, sustained overdraft fees, 

and transfer fees (collectively, 

‘‘overdraft-related fees’’).10 Supervision 

also obtained account-level and 

transaction-level data from several 

institutions regarding overdraft fees 

assessed over a one-month period on 

non-recurring debit card and ATM 

transactions.11 Some of the key 

observations gleaned from the data are 

discussed below. Please note that the 


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12 Institutions are prohibited from charging a fee 

for paying non-recurring debit card and ATM 

transactions into overdraft unless a consumer 

affirmatively opts-in to overdraft coverage for these 

transactions. See 12 CFR 1005.17(b)(1). Institutions 

are not expressly prohibited from charging an NSF 

fee on such transactions, however, the Federal 

Reserve Board signaled that such fees may violate 

the FTC Act. See 74 FR 59033, 59041 (Nov. 17, 

2009). This opt-in requirement does not extend to 

other transaction types (e.g., ACH and check 

transactions) and thus non-opted in accounts may 

be assessed overdraft fees for such transactions. 

discussion below does not present all of 

the CFPB’s observations or data 

obtained and that the CFPB’s analysis of 

data provided by institutions is ongoing. 

Overdraft Coverage and Fee Amounts 

per Overdraft Transaction 

During the time periods reviewed, the 

relevant institutions charged per-item 

overdraft fees that ranged from $15 per 

item to $36 per item. The amount of 

overdraft coverage provided for 

consumer transactions on which these 

fees were charged often was 

disproportionately small. For example, 

in these data sets, the median amount of 

overdraft coverage extended on onetime debit card and ATM transactions 

ranged from $14 to $30. In fact, the 

percentage of transactions for which the 

amount of overdraft coverage provided 

was less than the relevant per-item 

overdraft fee ranged from 32% to 74% 

across institutions. 

Incident and Distribution of Overdraft, 

NSF, and Other Overdraft-Related Fees 

Supervision obtained institution-level 

data segmented by certain account 

characteristics, including: opt-in 

status,12 i.e. accounts opted-in to 

overdraft services for one-time debit 

card and ATM transactions (‘‘opted-in 

accounts’’) versus accounts not opted-in 

to such overdraft services (‘‘not optedin accounts’’), and average account 

balance, i.e. accounts with an average 

balance at or less than $500 (‘‘lower 

balance accounts’’) versus accounts with 

an average balance greater than $500 

(‘‘higher balance accounts’’). Across all 

institutions monitored, most 

accountholders do not incur overdraftrelated fees. This data set also showed 

that overdraft-related fees constituted 

the majority of the total deposit account 

fees that consumers incurred and an 

even greater proportion of the total fees 

assessed to lower balance accounts and 

opted-in accounts. 

In 2022, in this data set, overdraft and 

NSF fees comprised 53% of all fees that 

the institutions charged to consumer 

checking accounts and nearly threequarters of all fees charged to lower 

balance accounts and opted-in accounts. 

Not surprisingly then, while 

accountholders overall each paid 

approximately $65 per year in overdraft 

and NSF fees on average, opted-in 

accounts and lower balance 

accountholders paid over $165 and $220 

in overdraft and NSF fees on average per 

year, respectively. A relatively small 

fraction of bank customers had a lower 

average balance but paid the majority of 

overdraft and NSF fees which is 

consistent with findings in prior 

research conducted by the CFPB. 

Indeed, across all institutions in 

aggregate, one-fifth of accounts were 

lower-balance accounts, but these 

accounts paid 68% of per-item overdraft 

fees assessed and 77% of the per-item 

NSF fees assessed. In fact, for at least 

one institution, over half of per-item 

overdraft fees assessed and over onethird of per-item NSF fees assessed were 

charged to lower balance, opted-in 

accounts even though only five percent 

of the institution’s accounts fell into this 

category. 

Data on the frequency of overdraft 

transactions and fees showed that the 

number of overdraft transactions and 

fees varies substantially with opt-in 

status. Accounts that overdraft most 

frequently (12 or more overdraft fees per 

year) were nearly five times as prevalent 

among opted-in accounts compared to 

not opted-in accounts. 

Account Closure and Charge-Offs 

Attributable to Overdraft Transactions 

and Overdraft-Related Fees 

Supervision also obtained data on 

account closure attributable to unpaid 

negative balances and overdraft 

transactions and the amount of chargedoff negative balances attributable to 

overdraft transactions (excluding fees). 

With respect to account closure, 

Supervision found that, across all 

institutions, most accounts were closed 

involuntarily and half of such accounts 

were closed due to an unpaid negative 

balance attributable to overdraft 

transactions and overdraft-related fees. 

In aggregate, losses to institutions in 

the form of charge-offs were evenly split 

between opted in accounts and not 

opted in accounts. Although overdraft 

transactions initiated by lower balance 

accounts were more likely to be 

charged-off, the average amount 

charged-off per lower balance account 

was roughly equal to the amount 

charged-off per higher balance account 

and was actually lower at some 

institutions. Notably, overdraft-related 

fees themselves generally constituted 

one-third of the total amount of negative 

balances charged-off. In fact, overdraftrelated fees constituted as much as twothirds of the total amount of all 

overdraft charge-offs by at least one 

institution. 

2.1.4 Unfair Statement Fees 

When supervised institutions send 

account statements to customers that 

provide information about their deposit 

accounts during the month, they 

generally deliver these statements to 

consumers in paper form, through the 

U.S. mail, unless consumers elect to 

receive the statements in verified and 

secure electronic form, whether by 

email or through the institution’s 

website or its mobile application. 

In recent examinations, Supervision 

observed that institutions charged fees 

for the printing and delivery of paper 

statements, including additional fees 

when they mailed a statement that was 

returned undelivered. Supervision 

found that, in certain instances, 

institutions did not print or attempt to 

deliver paper statements but continued 

to assess paper statement fees and 

returned mail fees each month. 

Supervision found that institutions 

engaged in an unfair act or practice by 

assessing paper statement fees and 

returned mail fees for paper statements 

they did not attempt to print and 

deliver. Assessing such delivery-related 

statement fees for undelivered 

statements caused substantial injury to 

consumers. Indeed, in one instance, a 

senior citizen discovered that her 

account was almost entirely depleted 

because an account statement had been 

returned undelivered five years prior 

and the institution had been assessing 

statement fees each month since. 

Consumers could not reasonably avoid 

this injury because they had no reason 

to anticipate that such fees would be 

assessed. The injury was also not 

outweighed by countervailing benefits 

to consumers or competition because 

assessing delivery-related fees for 

undelivered statements provides no 

benefit to consumers and does not 

actually compensate institutions for any 

costs incurred. 

In response to these findings, the 

institutions stopped assessing paper 

statements and returned mail fees for 

paper statements they did not attempt to 

deliver and will refund the millions of 

dollars in such fees that were charged to 

hundreds of thousands of consumers. 

2.1.5 Surprise Depositor Fees 

Surprise depositor fees, also known as 

returned deposit item fees, are fees 

assessed to consumers when an 

institution returns as unprocessed a 

check that the consumer attempted to 

deposit into his or her checking 

account. An institution might return a 

check for several reasons, including 


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Federal Register / Vol. 88, No. 199 / Tuesday, October 17, 2023 / Notices 71537 

13Consumer Financial Protection Bulletin 2022– 

06, Unfair Returned Deposited Item Fee Assessment 

Practices (Oct. 26, 2022), available at: https://

www.consumerfinance.gov/compliance/ 

supervisory-guidance/cfpb-bulletin-2022-06-unfairreturned-deposited-item-fee-assessment-practices/. 

14 Id. at 3–4. 

15 Id. at 5–6. 

16 Id. at 3 n.1. 

17Supervisory Highlights, Issue 28 (Fall 2022), 

available at: https://www.consumerfinance.gov/ 

data-research/research-reports/supervisoryhighlights-issue-28-fall-2022/. Supervisory 

Highlights, Issue 23 (Winter 2021), available at: 

cfpb_supervisory-highlights_issue-23_2021-01.pdf 

(consumerfinance.gov). 

18Supervisory Highlights, Issue 23 (Winter 2021), 

available at: https://www.consumerfinance.gov/ 

data-research/research-reports/supervisoryhighlights-covid-19-prioritized-assessments-specialedition-issue-23/. 

19Supervisory Highlights, Issue 28 (Fall 2022), 

available at https://www.consumerfinance.gov/dataresearch/research-reports/supervisory-highlightsissue-28-fall-2022/. 

20The CFPB previously discussed similar issues 

with add-on product refunds after repossession and 

early payoff in Supervisory Highlights, Issue 26, 

Spring 2022, available at: https://

www.consumerfinance.gov/data-research/researchreports/supervisory-highlights-issue-26-spring2022/; Consumer Financial Protection Bureau 

(consumerfinance.gov) and Supervisory Highlights, 

Issue 28, Fall 2023, available at: https://

www.consumerfinance.gov/data-research/researchreports/supervisory-highlights-issue-28-fall-2022/. 

insufficient funds in the originator’s 

account, a stop payment order, or 

problems with the information on the 

check. 

In October 2022, the CFPB issued a 

compliance bulletin stating that it is 

likely an unfair act or practice for an 

institution to have a blanket policy of 

charging return deposit item fees 

anytime that a check is returned unpaid, 

irrespective of the circumstances or 

patterns of behavior on the account.13

The CFPB stated that these fees cause 

substantial monetary injury for each 

returned item, which consumers likely 

cannot reasonably avoid because they 

lack information about and control over 

whether a check will clear.14 And it may 

be difficult to show that this injury from 

blanket return deposit item policies is 

outweighed by countervailing benefits 

to consumers or to competition.15

In recent examinations, Supervision 

has evaluated the returned deposit item 

fee practices at a number of institutions. 

Most of the examined institutions have 

advised the CFPB that they have 

eliminated returned deposit item fees 

entirely. Others have stated that they are 

in the process of doing so. As previewed 

in the October 2022 bulletin, 

Supervision has not sought to obtain 

monetary relief for return deposit item 

fees assessed prior to November 1, 2023. 

But Supervision will continue to 

monitor the relevant practices for 

compliance with the law and may direct 

remediation from institutions that 

continue charging unfair returned 

deposit item fees.16

2.1.6 Treatment of Pandemic Relief 

Benefits 

As described in past editions of 

Supervisory Highlights, Supervision 

conducted examination work to 

evaluate how financial institutions 

handled pandemic relief benefits 

deposited into consumer accounts.17

Specifically, the CFPB performed a 

broad assessment centered on whether 

consumers may have lost access to 

pandemic relief benefits, namely 

Economic Impact Payments and 

unemployment insurance benefits, as a 

result of financial institutions’ 

garnishment or setoff practices.18

Further follow-up reviews identified 

many supervised institutions that risked 

committing an unfair act or practice in 

violation of the CFPA in connection 

with their treatment of pandemic relief 

benefits which resulted in consumers 

being charged improper fees.19

In response to these findings, the 

institutions (1) refunded protected 

Economic Impact Payments improperly 

taken from consumers to set off fees or 

amounts owed to the institution; (2) 

refunded garnishment-related fees 

assessed to consumers for improper 

garnishment of Economic Impact 

Payments; and (3) reviewed, updated, 

and implemented policies and 

procedures to ensure the institution 

complies with applicable State and 

territorial protections regarding its setoff 

and garnishment practices. 

To date, Supervision has identified 

over $1 million in consumer injury in 

response to these examination findings, 

with institutions providing redress to 

over 6,000 consumers. Thus far, 

supervised institutions have provided 

redress of approximately $685,000 to 

consumers for improper setoff of 

Economic Impact Payments and 

approximately $315,000 for improper 

garnishment-related fees. Most 

supervised institutions have reported 

making substantial changes to their 

policies and procedures to prevent this 

type of consumer injury in the future. 

2.2 Auto Servicing 

Examiners also reviewed fee practices 

in connection with auto loans. Through 

this work, Supervision continues to 

identify unfair acts or practices related 

to auto servicers’ handling of refunds of 

add-on products after loans terminate 

early. Specifically, some servicers failed 

to ensure consumers received refunds, 

while others did so but miscalculated 

the refund amounts. 

When consumers purchase an 

automobile, auto dealers and finance 

companies offer optional, add-on 

products that consumers can purchase. 

Auto dealers and finance companies 

often charge consumers for the entire 

cost of any add-on products at 

origination, adding the cost of the addon product as a lump sum to the total 

amount financed. As a result, 

consumers typically make payments on 

these products throughout the loan 

term, even if the product expires earlier. 

2.2.1 Overcharging for Add-On 

Products After Early Loan Termination 

Examiners have continued to review 

servicer practices related to add-on 

product charges where loans terminated 

early through payoff or repossession.20

When loans terminate early, certain 

products no longer offer any possible 

benefit to consumers; whether a product 

offers a benefit depends on the type of 

product and reason for early 

termination. For example, many vehicle 

service contracts continue to provide 

possible benefits to consumers after 

early payoff but not after repossession, 

while a credit product (such as 

Guaranteed Asset Protection (GAP) or 

credit-life insurance) will not offer any 

possible benefits after either early payoff 

or repossession. 

Examiners found auto servicers 

engaged in unfair acts or practices 

because consumers suffered substantial 

injury when servicers failed to ensure 

they received refunds for add-on 

products following early loan 

termination; consumers were essentially 

required to pay for services they could 

no longer use, as the relevant products 

(including vehicle service contracts, 

GAP, or credit-life insurance) 

terminated either when the loan 

contract was terminated or provided no 

possible benefits after the consumer lost 

use of the vehicle. Consumers could not 

reasonably avoid the injury because 

they had no control over the servicers’ 

refund processing actions. When 

servicers present consumers with payoff 

amounts, deficiency balances, or 

refunds, consumers may have no reason 

to know that the amounts include 

unearned add-on product costs. And 

reasonable consumers might not apply 

for refunds themselves because they 

may be unaware that the contract 

provided that they could do so. 

Examiners concluded that the injury 

was not outweighed by any 

countervailing benefits to consumers or 

competition. 

In response to these findings, 

servicers are remediating impacted 

consumers more than $20 million and 


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71538 Federal Register / Vol. 88, No. 199 / Tuesday, October 17, 2023 / Notices 

21The CFPB previously discussed similar issues 

with add-on product refund calculations in 

Supervisory Highlights, Issue 18, Winter 2019, 

available at: https://www.consumerfinance.gov/ 

data-research/research-reports/supervisoryhighlights-winter-2019/. 

22 12 CFR 1005.31(b)(1)(ii). As stated in comment 

31(b)(1)–1(ii), fees include ‘‘any fees imposed by an 

agent of the provider at the time of the transfer.’’ 

23 12 CFR 1005.33(c)(2)(ii)(B). 

24Consumer Financial Protection Circular 2022– 

06, Unanticipated Overdraft Fee Assessment, 

available at: https://files.consumerfinance.gov/f/ 

documents/cfpb_unanticipated-overdraft-feeassessment-practices_circular_2022-10.pdf. 

implementing processes to ensure 

consumers receive refunds for add-on 

products that no longer offer any 

possible benefit to consumers. 

2.2.2 Miscalculating Refunds for AddOn Products After Early Loan 

Termination 

Examiners also have continued to 

identify problems with the calculation 

of unearned fee amounts after loan 

termination.21 Examiners found that 

servicers engaged in unfair acts or 

practices when they used miscalculated 

add-on product refund amounts after 

loans terminated early. These servicers 

had a policy to obtain add-on product 

refunds and relied on service providers 

to calculate the refund amounts. The 

service providers miscalculated the 

refunds due, either because they used 

the wrong amount for the price of the 

add-on product or because they 

deducted fees (such as cancellation fees) 

that were not authorized under the addon product contract; the servicers then 

used these miscalculated refund 

amounts. 

Examiners found that servicers 

engaged in an unfair act or practice 

when they used miscalculated add-on 

product refund amounts after loans 

terminated early. Using miscalculated 

refund amounts caused, or was likely to 

cause, substantial injury because 

servicers either communicated 

inaccurately higher deficiency balances 

or provided smaller refunds than 

warranted after early loan termination. 

Consumers could not reasonably avoid 

the injury because they were not 

involved in the servicers’ calculation 

process, and it is reasonable for 

consumers to assume that the 

calculations are accurate. And the injury 

was not outweighed by countervailing 

benefits to consumers or competition. 

In response to these findings, 

servicers are remediating impacted 

consumers and improving monitoring of 

service providers. 

2.3 Remittances 

Examiners also review activities of 

remittance transfer providers to ensure 

that fees are disclosed and charged 

consistent with subpart B of Regulation 

E (the Remittance Rule). These 

examinations found that certain 

providers have violated regulations by 

failing to appropriately disclose fees or 

failing to refund fees, in certain 

circumstances, because of an error. 

The Remittance Rule requires that 

remittance transfer providers disclose 

any transfer fees imposed by the 

provider.22 Recent examinations have 

found that remittance providers have 

failed to disclose fees imposed by their 

agents at the time of the transfer, in 

violation of 12 CFR 1005.31(b)(1)(ii). 

This reduced the total wire amount the 

recipients received as compared to the 

amount that had been disclosed. 

Additionally, in the case of an error for 

failure to make funds available to a 

designated recipient by the date of 

availability, the Remittance Rule states 

that if a remittance transfer provider 

determines an error occurred, the 

provider shall refund to the sender any 

fees imposed, and to the extent not 

prohibited by law, taxes collected on the 

remittance transfer.23 Examiners found 

that certain providers failed to correct 

errors by refunding to the sender fees 

imposed on the remittance transfer, 

within the specified time frame, where 

the recipients did not receive the 

transfers by the promised date, in 

violation of 12 CFR 1005.33(c)(2)(ii)(B). 

In response to these findings, 

supervised institutions implemented 

corrective action to prevent future 

violations and provided remediation to 

consumers charged fees in violation of 

regulatory requirements. 

3. Consumer Risk-Payment Processing 

3.1 Payment Platforms for Student 

Meal Accounts 

Some kindergarten through 12th grade 

school systems contract with companies 

that run online platforms that allow 

parents or guardians to manage their 

students’ meal accounts. In most cases, 

families using these online platforms 

pay a per-transaction fee to add funds to 

their meal accounts. Any school district 

that participates in Federal school meal 

programs and contracts with fee-based 

online platforms must also provide free 

options for adding money to student 

meal accounts. As a result, families can 

avoid the transaction fee by adding 

funds using one of these alternative 

methods, such as making payments 

directly to the school or district. 

The CFPB learned of covered persons 

that maintained these online payment 

platforms where consumers may have 

paid fees that they would not have paid 

if they had known of the existence of 

free options for adding meal funds to 

the student’s account. Because 

consumers did not know their options, 

they incurred transaction fees that they 

could have avoided. As the fees were 

assessed on a per-transaction basis, the 

fees likely disproportionately affected 

lower-income families that must add 

smaller amounts more often, thereby 

incurring more transaction fees than 

higher-income users that can deposit 

larger amounts less frequently. 

The CFPB notified the covered 

persons that these practices may not 

comply with consumer financial 

protection laws. 

4. Supervisory Program Developments 

4.1 Recent CFPB Supervision Program 

Developments 

Set forth below is a recap of the most 

salient supervision program 

developments that implicate junk fees. 

More information including circulars, 

bulletins, and advisory opinions about 

the CFPB’s junk fee initiative can be 

found at: https://

www.consumerfinance.gov/rules-policy/ 

junk-fees/. 

4.1.1 CFPB Issued a Circular on 

Unanticipated Overdraft Fee 

Assessment Practices 

On October 26, 2022, the CFPB issued 

guidance indicating that overdraft fees 

may constitute an unfair act or practice 

under the CFPA, even if the entity 

complies with the Truth in Lending Act 

(TILA) and Regulation Z, and the 

Electronic Fund Transfer Act (EFTA) 

and Regulation E.24 As detailed in the 

circular, when supervised institutions 

charge surprise overdraft fees, 

sometimes as much as $36, they may be 

breaking the law. The circular provides 

some examples of potentially unlawful 

surprise overdraft fees, including 

charging fees on purchases made with a 

positive balance. These overdraft fees 

occur when an institution displays that 

a customer has sufficient available 

funds to complete a debit card purchase 

at the time of the transaction, but the 

consumer is later charged an overdraft 

fee. Often, the institution relies on 

complex back-office practices to justify 

charging the fee. For instance, after the 

institution allows one debit card 

transaction when there is sufficient 

money in the account, it nonetheless 

charges a fee on that transaction later 

because of intervening transactions. 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 88, No. 199 / Tuesday, October 17, 2023 / Notices 71539 

25Bulletin 2022–06: Unfair Returned Deposited 

Item Fee Assessment Practices, available at: https:// 

files.consumerfinance.gov/f/documents/cfpb_

returned-deposited-item-fee-assessment-practice_

compliance-bulletin_2022-10.pdf. 

26Advisory Opinion on Debt Collectors’ 

Collection of Pay-to-Pay Fees, available at: https:// 

www.consumerfinance.gov/compliance/advisoryopinion-program/. 

27Consumer Financial Protection Bureau v. 

USASF Servicing, LLC. The complaint is available 

at: https://www.consumerfinance.gov/about-us/ 

newsroom/cfpb-sues-usasf-servicing-for-illegallydisabling-vehicles-and-for-improper-double-billingpractices/. 

4.1.2 CFPB Issued a Bulletin on Unfair 

Returned Deposited Item Fee 

Assessment Practices 

As described above, on October 26, 

2022, the CFPB issued a bulletin 25

stating that blanket policies of charging 

returned deposited item fees to 

consumers for all returned transactions 

irrespective of the circumstances or 

patterns of behavior on the account are 

likely unfair under the CFPA. 

4.1.3 CFPB Issued an Advisory 

Opinion on Debt Collectors Collection of 

Pay To Pay Fees 

On June 29, 2022, the CFPB issued an 

advisory opinion 26 affirming that 

Federal law often prohibits debt 

collectors from charging ‘‘pay-to-pay’’ 

fees. These charges, commonly 

described by debt collectors as 

‘‘convenience fees,’’ are imposed on 

consumers who want to make a 

payment in a particular way, such as 

online or by phone. 

5. Remedial Actions 

5.1 USASF Servicing 

On August 2, 2023, the CFPB filed a 

lawsuit in Federal court against auto 

loan servicer USASF Servicing, alleging 

USASF engaged in a host of illegal 

practices that harmed individuals with 

auto loans.27 These alleged practices 

include wrongfully disabling borrowers’ 

vehicles, wrongfully activating late 

payment warning tones, improperly 

repossessing vehicles, double-billing 

borrowers for insurance premiums, 

misallocating consumer payments, and 

failing to return millions of dollars in 

unearned GAP premiums to consumers. 

The CFPB is seeking redress for 

consumers, civil money penalties, and 

to stop any future violations. 

Rohit Chopra, 

Director, Consumer Financial Protection 

Bureau. 

[FR Doc. 2023–22869 Filed 10–16–23; 8:45 am] 

BILLING CODE 4810–AM–P 

DEPARTMENT OF EDUCATION 

Membership of the Performance 

Review Board 

AGENCY: Office of Finance and 

Operations, Department of Education. 

ACTION: Notice. 

SUMMARY: The Secretary publishes a list 

of persons named to serve on the 

Performance Review Board that oversees 

the evaluation of performance 

appraisals for Senior Executive Service 

members of the Department of 

Education (Department). 

DATES: These appointments are effective 

on October 17, 2023. 

FOR FURTHER INFORMATION CONTACT: 

Jennifer Geldhof, Director, Executive 

Resources Division, Office of Human 

Resources, Office of Finance and 

Operations, U.S. Department of 

Education, 400 Maryland Avenue SW, 

Room 210–00, LBJ, Washington, DC 

20202–4573. Telephone: (202) 580– 

9669. Email: Jennifer.Geldhof@ed.gov. 

If you use a telecommunications 

device for the deaf (TDD), or text 

telephone (TTY), call the Federal Relay 

Service (FRS), toll free, at 1–800–877– 

8339. 

SUPPLEMENTARY INFORMATION: 

Membership 

Under the Civil Service Reform Act of 

1978, Public Law 95–454 (5 U.S.C. 

4314(c)(4)), the Department must 

publish in the Federal Register a list of 

persons named to serve on the 

Performance Review Board that oversees 

the evaluation of performance 

appraisals for Senior Executive Service 

members of the Department. The 

following persons are named to serve on 

the Performance Review Board: 

Chapman, Christopher D. 

Clay, Jacqueline J. 

Eliadis, Pamela D. 

Juengst, Phillip R. 

Mitchell, Calvin J. 

St. Pierre, Tracey 

Toney, Lawanda 

Alternate: 

Burse, Tiwanda M. 

Accessible Format: On request to the 

program contact person listed under FOR

FURTHER INFORMATION CONTACT, 

individuals with disabilities can obtain 

this document in an accessible format. 

The Department will provide the 

requestor with an accessible format that 

may include Rich Text Format (RTF) or 

text format (txt), a thumb drive, an MP3 

file, braille, large print, audiotape, or 

compact disc, or other accessible format. 

Electronic Access to This Document: 

The official version of this document is 

the document published in the Federal 

Register. You may access the official 

edition of the Federal Register and the 

Code of Federal Regulations at 

www.govinfo.gov. At this site you can 

view this document, as well as all other 

documents of this Department 

published in the Federal Register, in 

text or Portable Document Format 

(PDF). To use PDF you must have 

Adobe Acrobat Reader, which is 

available free at the site. 

You may also access documents of the 

Department published in the Federal 

Register by using the article search 

feature at www.federalregister.gov. 

Specifically, through the advanced 

search feature at this site, you can limit 

your search to documents published by 

the Department. 

Miguel A. Cardona, 

Secretary of Education. 

[FR Doc. 2023–22825 Filed 10–16–23; 8:45 am] 

BILLING CODE 4000–01–P 

DEPARTMENT OF EDUCATION 

[Docket ID ED–2023–IES–0182] 

Request for Information on Potential 

New Program, From Seedlings to Scale 

(S2S); Correction 

AGENCY: Institute of Education Sciences, 

Department of Education. 

ACTION: Notice; correction. 

SUMMARY: On October 12, 2023, the 

Department of Education (Department) 

published in the Federal Register a 

request for information (RFI) on a 

potential new program, From Seedlings 

to Scale (S2S). We are correcting the 

docket identification number. All other 

information in the RFI remains the 

same. 

DATES: This correction is applicable 

October 17, 2023. 

FOR FURTHER INFORMATION CONTACT: Erin 

Higgins, U.S. Department of Education, 

400 Maryland Avenue SW, Washington, 

DC 20202. Telephone: (202) 987–1531. 

Email: Erin.Higgins@ed.gov. 

If you are deaf, hard of hearing, or 

have a speech disability and wish to 

access telecommunications relay 

services, please dial 7–1–1. 

SUPPLEMENTARY INFORMATION: On 

October 12, 2023, the Department 

published a RFI on S2S, a potential new 

program. (88 FR 70652). We are 

correcting the docket identification 

number. 

Accessible Format: On request to the 

contact person listed under FOR FURTHER

INFORMATION CONTACT, individuals with 

disabilities can obtain this document in 


lotter on DSK11XQN23PROD with NOTICES1