Banks Failing to Adequately Inform Customers of Fees: GAO Report

By Sarah Borchersen-Keto, Washington Staff Writer

Many banks have increased fees in recent years, yet they have failed to provide customers with information about these fees, despite federal regulations requiring that they do so, a new report from the Government Accountability Office (GAO) states.

Rep. Carolyn B. Maloney (D-N.Y.), chairman of the Subcommittee on Financial Institutions and Consumer Credit, requested the report and described its conclusions as "troubling." Maloney asked why consumers should be "forced to walk blindly into the terms and conditions of a bank account."

The report was based on undercover visits by GAO staff to 185 branches of 154 depository institutions, in which they were unable to obtain detailed checking and savings account fee information and account terms and conditions at over one-fifth of them.

Staff also examined websites of all the institutions they visited and could not find detailed fee information on more than half of them.

The GAO is recommending 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, as part of their oversight, regulators incorporate steps to assure that disclosures continue to be made available to consumers.

The report found that consumers paid over $36 billion in various fees associated with checking and savings accounts during 2006.

Posted March 14, 2008.