Pressure Mounting to End Abusive Overdraft Fees

Rep. Maloney Introduces Overdraft Protection Act

With Capital One announcing an end to overdraft fees and consumer groups putting pressure on other banks and the Consumer Financial Protection Bureau (CFPB) to take action to end the practice, pressure is mounting for major changes in a key source of bank revenue.

Now, Rep. Carolyn Maloney of New York has introduced the Overdraft Protection Act to protect consumers from the most abusive of overdraft fee practices.

Citing research from the CFPB on the impact of fees on consumers, Maloney said:

“Today’s research underscores the profound harm overdraft fees inflict on U.S. consumers, and I welcome the CFPB’s enhanced scrutiny of banks in this area. These fees are predatory and an influential driver of racial inequity, taking billions of dollars out of the pockets of those Americans who can afford it the least. It’s not right for a $10 sandwich at a bodega to cost $50 due to overdraft charges. My Overdraft Protection Act would stop these abusive practices once and for all.”

Key provisions of the Overdraft Protection Act include:

• Requiring that fees be “reasonable and proportional” to the cost of processing these transactions and the amount of the overdraft;
• Preventing institutions from re-ordering transactions to artificially increase their fees;
• Limiting the number of fees…