Reed wants fee disclosure

WASHINGTON – Consumers should know every fee they could be charged for every transaction they perform at their financial institutions, says Rhode Island Democrat U.S. Sen. Jack Reed.
That’s why he and Sen. Dick Durbin, D-Ill., asked financial institutions nationally to voluntarily adopt a bank account fee disclosure form designed to make checking account terms and fees transparent and easy for consumers to understand.
The request on Nov. 3 follows the decision by Bank of America, Wells Fargo and other banking giants to cancel or delay planned debit card usage fees. The senators say consumers could be at risk from new, hidden fees being issued in their place.
“I think what you’re seeing now is a lot of Rhode Islanders who are honestly confused about the fees they’re being charged and they’re discovering there’s a lot of hidden cost in the banking system,” Reed said.
After research, which included focus groups, the Pew Charitable Trusts’ Safe Checking in the Electronic Age Project designed a clear form for financial institutions to adopt that lays out all of the fees. Pentagon Federal Credit Union already has adopted the form, Reed said.
“The more information that a consumer has, the better choices he or she will make,” he said. “So if a consumer knows that there are extra fees for doing something, they can make a calculation and say then ‘I’m not going to do this because it’s costing me too much money.’
“If these fees are hidden, then the consumers go ahead and continue to make choices which are not in their best economic interest.”
An example of “hidden” charges are exchange fees on debit cards that are hidden to consumers because they were paid by the merchants then passed on to consumers.
Then the Federal Reserve adopted limiting the fees, which helps particularly small businesses in Rhode Island because that was an uncontrollable cost to them. But since that has been capped, they can control their costs.
“Anytime you now the full price of a product, you make better choices,” Reed said.
Durbin and Reed also sent a letter to the acting director of the Consumer Financial Protection Bureau, asking the consumer watchdog to require financial institutions to post a standardized, concise and consumer-friendly disclosure form on their website that lists the fees and key terms associated with checking accounts.