Stimulus payments should go directly to consumers, not to cover fees, agency asserts

In a release sporting a headline saying it is encouraging financial institutions and debt collectors to allow federal stimulus payments to reach consumers, the Consumer Financial Protection Bureau (CFPB) Wednesday said it is concerned that some payments will be intercepted to cover such things as unpaid overdraft fees.

In a statement, CFPB Acting Director Dave Uejio said the bureau is squarely focused on addressing the impact of the coronavirus crisis on economically vulnerable consumers and is watching carefully the economic income payments (EIPs) to consumer authorized under the American Rescue Plan, adopted by Congress just last week. The EIPs were part of President Joe Biden’s plan to provide an economic stimulus to the country in the wake of financial impact of the pandemic.

“The Bureau is concerned that some of those desperately needed funds will not reach consumers, and will instead be intercepted by financial institutions or debt collectors to cover overdraft fees, past-due debts, or other liabilities,” Uejio stated. “The Bureau will stay closely engaged on this issue as the COVID relief payment rollout continues.”

Uejio maintained in the release that financial industry trade associations have told the bureau that their member institutions want to work with consumers struggling in the pandemic. “Many of these organizations have told us they have begun or soon will take proactive measures to help ensure that consumers can access the full value of their stimulus payments,” Uejio said. “If payments are seized, many financial institutions have pledged to promptly restore the funds to the people who should receive them.

“We appreciate these efforts, which recognize the extraordinary nature of this crisis and the extraordinary financial challenges facing so many families across the country,” Uejio stated.

Uejio also vowed to stay in touch with state regulators – who he said have taken actions to protect stimulus funds – to better understand the effectiveness of their efforts. He said the CFPB would also continue to closely monitor consumer complaint data and other information to “help us to better understand how these issues are affecting consumers.”

Consumer Financial Protection Bureau Encourages Financial Institutions and Debt Collectors to Allow Stimulus Payments to Reach Consumers

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