Menendez questions director of CFPB about how the CFPB can curb excessive overdraft fees
The Senator questioned how the CFPB's proposed rule will protect users of P2P apps like Venmo and Paypal
WASHINGTON, D.C. – U.S. Senator Bob Menendez (D-N.J.), a senior member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, Thursday asked the Director of the Consumer Financial Protection Bureau (CFPB), Rohit Chopra, about what the CFPB can do to rein in excessive overdraft fees.
“While some banks have either decreased or eliminated overdraft fees altogether, in large part due to increased scrutiny and oversight, banks still collected an estimated $7.7 billion in 2022 in overdraft and nonsufficient fund fees. Furthermore, a recent report from California state regulators showed that thirty credit unions earned half or more of their net profit just from overdraft and NSF fees,” Menendez said. “Overdraft fees are one major reason why so many Americans are still hesitant to enter the formal financial system so I look forward to what you do in this regard.”
The Senator highlighted the CFPB’s proposed rule to establish supervisory authority over large non-banks with payment apps including Venmo, PayPal and Cash App. Sen. Menendez also asked Director Chopra to explain how the proposed rule would protect users and make these apps more secure.
“I was pleased to see the CFPB’s proposed rule earlier this month establishing supervisory authority over large non-banks with person-to-person payment apps such as Venmo, PayPal, and Cash App – mobile peer to peer payment applications, which are growing ever more popular and are expected to facilitate transactions worth over $1 trillion this year. You and I and several other members of this Committee have spoken and written letters about the rampant scams and frauds on these apps, as well as the difficulty consumers can face in being made whole as a result of these activities,” Menendez said. “I look at the rule as an important first step to creating a fairer and more secure digital payment ecosystem, and I look forward to your continued work in this regard.”
The Senator brought attention to a letter he lead to the Department of Education asking that they get answers from MOHELA, the servicer who manages the Public Service Loan Forgiveness Program, regarding the issues borrowers were confronting with the return to repayment. Sen. Menendez questioned Director Chopra about what the CFPB is doing to hold student loan services accountable and support borrowers as repayments have restarted.
“I have heard from constituents who have noted extremely long wait times to hear from a servicer representative and incomplete and unhelpful information from automated systems. On top of that – millions of borrowers have been moved to a different servicer. Given these, and many more, issues, I’m pleased to see the CFPB open an investigation into MOHELA, Nelnet, Edfinancial, and Aidvantage’s customer service practices in October,” Menendez said. “The repayment process has begun – it’s hitting many heavily. Getting the right answers and being able to speak to a servicer that actually services you is critical.”
In June, Sen. Menendez highlighted the importance of the CFPB by asking Director Rohit Chopra about who would protect consumers if the CFPB was defunded. In June, the Senator spoke on the Senate floor in strong opposition to Republicans’ cruel legislation that would force borrowers, including public sector workers such as teachers, police officers, and firefighters, to repay student loans – with interest – that were suspended during the COVID-19 pandemic.
In April, Sen. Menendez, Sen. Mike Braun (R-Ind.), Rep. Chrissy Houlahan (D-Pa.-06) and Rep. Brian Fitzpatrick (R-Pa.-01), introduced the Public Service Loan Forgiveness (PSLF) – a bipartisan bill that would change a technicality in federal law that unnecessarily requires that PSLF applicants be employed in a public service role at the time of forgiveness, even if they have already made 120 qualifying payments. This has negatively affected public service employees who have completed their 120 payments, decided to retire or move on from their current jobs or public service careers, and suddenly become ineligible for forgiveness even though they dutifully served their communities for at least ten years.
In March, Sen. Menendez and his Colleagues led an effort to urge financial institutions and regulators to help people keep their hard-earned cash safe from fraud and scams, especially as scammers find new ways and employ sophisticated schemes to dupe customers using instant peer-to-peer payment systems like Zelle to send money on the platform under fraudulent pretenses. In December 2022, during a Senate Banking hearing, Sen. Menendez urged CFPB Director Rohit Chopra to investigate customer service issues with MOHELA, and pressed Director Chopra on the agency’s process towards issuing agency guidance to ensure consumers are protected from Zelle-related fraud.
Menendez signed an amicus brief in the Supreme Court case CFPB v. Community Financial Services Association of America, defending the CFPB’s funding structure as constitutional. In 2017, the Senator signed an amicus brief in support of the CFPB’s independence.
