CFPB Encourages Financial Institutions Not to Intercept Stimulus Funds

CFPB Acting Director Dave Uejio issued a statement encouraging financial institutions and debt collectors to permit consumers to access the full value of their Economic Impact Payment (EIP) funds distributed through the American Rescue Plan Act of 2021.  Additionally, the CFPB issued a new consumer advisory offering advice on steps consumers can take if they believe their bank or credit union has withheld their stimulus payment to cover an overdrawn account balance.

Acting Director Uejio’s statement voiced concern over EIP funds not reaching consumers if they are “intercepted” by financial institutions or debt collectors to cover “overdraft fees, past-due debts, or other liabilities[,]” and applauded those entities taking “proactive measures” to ensure full EIP funds would be made available to consumers. It is unclear what Acting Director Uejio means when he refers to “intercepted” EIP funds. Acting Director Uejio did not state outright that the application of overdraft fees to accounts containing EIP funds is impermissible. The American Rescue Plan Act of 2021 does not provide the CFPB a cause of action or direct enforcement mechanism for fees taken from EIP funds.  However, the CFPB does have the authority to bring enforcement actions for unfair or deceptive acts or practices (UDAAP). In the past, the CFPB has done so for alleged UDAAP violations related to overdraft fees.  Acting Director Uejio concluded by stating the CPFB will “continue to closely monitor consumer complaint data and other information that will help us to better understand how these issues are affecting consumers.”