Pressure Mounting to End Abusive Overdraft Fees

Rep. Maloney Introduces Overdraft Protection Act

Andy Spears
2 min readDec 8, 2021


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 they can charge to 1 per month and 6 per year;
  • Empowering consumers by requiring that they proactively opt-in to overdraft programs in the first place — rather than automatically being enrolled;
  • Improving transparency and disclosures; and
  • Prohibiting charging overdraft fees for “debit holds” that exceed actual transaction amounts, among other strong measures.

Advocates at the National Consumer Law Center have also highlighted the harms caused by overdraft fees:

“Overdraft and NSF fees are one of the leading reasons that people are unbanked, either because past overdrafts put the consumer on an account screening list that prevents them from opening new accounts, or because the fees make it too costly to maintain an account,” said Chi Chi Wu, staff attorney at the National Consumer Law Center.

Photo by Eduardo Soares on Unsplash



Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .