CFPB cautions banks against creating fictitious accounts for fee harvesting


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According to a recent circular from the Consumer Financial Protection Bureau (CFPB), banks that open a deposit account on their own to process transactions after a customer has already closed it are in violation of the Consumer Financial Protection Act.

The CFPB received complaints alleging that even after a customer took all the necessary steps to close an account, their bank had “reopened” the closed account and assessed overdraft and nonsufficient funds fees. This observation led to the creation of this circular.

CFPB also learned that financial institutions have reopened accounts by charging account maintenance fees, even if the consumer was exempt from paying account maintenance fees at the time the account was closed.

Read More: CFPB warns banks against creation of fake accounts for fee harvesting

TalkFintech Bureau
TalkFintech Bureau
TalkFintech is focused on the latest financial sector technologies and tools- covering all tech used by banks, investors, insurance, and wealth management sectors- and also conversations on retail financial management tools.


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