The CFPB initiated a review of bank overdraft practices. At its Roundtable in New York City, Director Richard Cordray compared overdraft practices to payday lending, stating “[b]oth disproportionately affect a vulnerable demographic of consumers.” In an effort to further evaluate overdrafts, the CFPB issued a request for information from consumers, third party processors and financial institutions regarding overdraft programs and their costs, benefits and risks to consumers. The CFPB also published a model overdraft “penalty fee box,” a disclosure that would appear on customers’ checking account statements and online banking landing pages and would highlight overdraft amounts and fees. Finally, the CFPB released a Consumer Advisory aimed at educating consumers on the ramifications of opting in to ATM and debit card overdraft coverage and fees under Regulation E, as well as alternatives to reduce overdraft fees. Click here for Director Cordray’s remarks at the Roundtable, here for the information request, here for the penalty box prototype and here for the Consumer Advisory. Responses to the information request are due by April 30, 2012.
Alert March 06, 2012