“It’s troubling that many consumers may find it difficult to obtain account terms and information about fees before opening an account,” said Maloney.  “You don’t have to buy a car before you find out how many miles per gallon it gets, and you don’t have to buy a house before you find out what your taxes will be.  Why should consumers be forced to walk blindly into the terms and conditions of a bank account?”

The GAO Bank Fees report found that a number of average bank fees have risen by 10 percent or more since 2000.  Overdraft fees, for example, increased 11 percent between 2000 and 2007.  In 2006 alone, consumers paid over $36 billion in various fees associated checking and savings accounts at depository institutions – banks, thrifts, and credit unions. 

“Americans devote a lot of their hard-earned money to bank fees,” Maloney said.  “Many of these fees are for useful services that most consumers are happy to pay for; banks have the right to make money for these valuable services.  Problems arise, however, when consumers get smacked with unexpected bank fees – that’s just not fair.”

For the report, GAO staff from 12 cities across the United States made undercover visits to 185 branches of 154 depository institutions and were unable to obtain detailed checking and savings account fee information and account terms and conditions at over one-fifth of them.  GAO staff also examined the websites of all of the institutions they visited and could not find detailed fee information on more than half of them.  Federal rules require that banks disclose fees and interest rates to consumers. 

“Banks should not withhold information from customers about their accounts and their money.  Fairness is an essential component to a safe and sound banking system.  The free market works properly when consumers know the terms of a contract and can make informed choices based on complete and accurate information,” continued Maloney.

The GAO report recommends that federal banking regulators assess the extent to which consumers receive disclosures on fees and account terms and conditions prior to opening an account.  It also recommends that the regulators incorporate into their oversight steps to assure that disclosures continue to be made available to consumers.

“The regulatory agencies should follow the GAO’s recommendations and take immediate action to ensure that consumers have access to the information they need to make informed decisions about their own finances,” concluded Maloney.

To read the GAO Bank Fees report in its entirety, click here. 

Background:

Rep. Maloney introduced H.R. 946, which would crack down on abusive overdraft fees and equip bank customers with more control and information about overdraft fees: http://maloney.house.gov/index.php?option=com_content&task=view&id=1286&Itemid=61.

Rep. Maloney has also introduced “The Financial Consumer Hotline Act,” which would establish a single, toll-free telephone number that consumers can call if they have a problem with their bank and want to speak to the bank’s federal regulator.  A number of different governing bodies currently regulate banks, which can make it difficult for consumers to figure out who they should contact with concerns and complaints.  The GAO Bank Fees report details consumer complaints to regulators, but there is a chance that its numbers are low because many consumers may not have known who to contact about their complaints.  For more information of “The Financial Consumer Hotline Act”: http://maloney.house.gov/index.php?option=com_content&task=view&id=1516&Itemid=61. 

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