The OCC has acknowledged problems with bank overdraft systems but has allowed the banks they regulate to use them.

Debit cards were once a safe alternative to the convenience of credit cards, with the advantage that you could not get into trouble with debt. Now they are dangerous, often triggering bank overdraft fees unexpectedly.

Congresswoman Carolyn Maloney proposed the Overdraft Protection Act of 2009, which would reform out-of-control bank and credit union overdraft practices. Fees for debit card transactions and other types of overdrafts have reached well over $20 billion per year.

Eric Halperin, director of CRL's DC office, submitted testimony to the Financial Services Committee of the U.S. House on H.R. 3904, the Overdraft Protection Act of 2009. He called the Act a crucial measure for protecting consumers from abusive bank overdraft fees, which have reached $23.7 billion per year. The Federal Reserve Board has failed to address the problem, and reform is urgently needed.

The Center for Responsible Lending strongly supports the FAIR Overdraft Coverage Act as it would represent a major advance in overdraft reform.

Banks and credit unions collected $23.7 billion in overdraft fees in 2008.

Brief facts about overdraft loans, largely derived from CRL research

The Center for Responsible Lending, along with Consumer Action, Consumer Federation of America, Consumers Union, National Association of Consumer Advocates, National Consumer Law Center (on behalf of its low-income clients), and U.S. PIRG provide the following comments regarding the Federal Reserve Board’s proposed rule to amend Regulation E pursuant to the Electronic Funds Transfer Act.

A survey of consumer preferences regading overdraft fees and the choice to opt-in to such programs.

Overdraft comment letter