The latest news on overdraft fees, overdraft fees and other bank fees from the Center for Responsible Lending.
- Banks Fight Back Against Overdraft Reporting Requirement
American Banker 04 Jun 2013
The banking industry is responding negatively to a proposal that banks' financial reports to regulators include details of how much money they make from overdraft charges and other consumer fees...
- First Merchants Accused of Overdraft Fee Violations
Indianapolis Business Journal 29 May 2013
Indiana-based First Merchants Bank is being accused of reordering customers’ checking account transactions to drain accounts faster and make checks bounce more frequently, triggering millions of dollars in overdraft fees...
- Wells Fargo Ordered to Pay $203 Million in Overdraft Case
Reuters 15 May 2013
A federal judge once again has ordered Wells Fargo to pay $203 million to settle charges that it levied excessive overdraft fees, maximizing the penalties by purposefully processing transactions from the largest dollar amount to the smallest. The ruling brings back a penalty that U.S. District Judge William Alsup handed down in August 2012...
- Huntington Changes Policy on Posting Checking Transactions, Will Save Customers $25 Million in Overdraft Fees
Cleveland Plain Dealer (OH) 09 May 2013
Huntington Bank has changed how transactions are posted to its consumer checking accounts, potentially reducing the number of customer overdrafts. Banks traditionally process debits from the highest dollar value to the lowest, often causing one large transaction -- such as a mortgage payment -- to drain the account, leaving smaller transactions to bounce and rack up multiple overdraft fees...
- Small Banks Seek Exemption in U.S. Collection of Fee Data
Bloomberg 02 May 2013
The Independent Community Bankers of America has asked federal regulators to exempt them from what they call an unnecessary and onerous data-collection effort to spot how consumers may be fleeced by checking account overdraft fees and other charges...
- Mobile Tools, High Fees Quash Demand for Overdraft Protection
The Financial Brand 23 Apr 2013
Mobile banking and high fees have led to a decline in consumers' demand for overdraft protection. Bank revenue from overdraft fees fell in 2010 and 2011 because of Federal Reserve rules that changed how banks can charge for “overdraft protection.” Banks reported higher fee revenue in 2012 because of hikes in overdraft-related fees, but there are reasons to believe that these costs have hit a ceiling...
- U.S. Overdraft Fees Jump to $32 Billion as New Rules Prove Ineffective
Huffington Post 29 Mar 2013
Americans paid more in overdraft fees last year, although a measure was passed in 2010 to curtail abusive overdraft charges. A report by Illinois-based Moebs Services found that banks and credit unions increased their 2012 overdraft fee earnings by 1.3 percent over the previous year to $32 billion...
- House Democrats Introduce Overdraft Fee Bill
American Banker 21 Mar 2013
Reps. Maxine Waters (D-Calif.), Carolyn Maloney (D-N.Y.), and 44 co-sponsors have proposed the Overdraft Protection Act to address concerns about the fees that banks charge customers who spend more money than is available in their accounts...
- Overdraft Revenue Makes First Climb in Three Years: Report
American Banker 19 Mar 2013
Overdraft revenue at banks, thrifts, and credit unions hit $32 billion in 2012, up 1 percent from 2011, reports Moebs Services. The total represents the first increase since 2009, when financial institutions raked in $37.1 billion in from overdraft fees. The steepest penalties are found at the biggest banks...
- Overdraft Rules Get Go-Slow Approach at Consumer Bureau
Bloomberg Businessweek 28 Feb 2013
The Consumer Financial Protection Bureau (CFPB) has decided not to take severe action just yet to tighten rules on checking overdraft fees. CFPB director Richard Cordray said no decisions have been made about new rules but indicated that the agency will work on the matter “over the next couple of years.” Consumer groups want tougher overdraft rules, arguing that a 2010 Federal Reserve rule requiring banks to secure consumer consent before charging the fees did not go far enough. "Overdrafts are rife with predatory features: they are high-priced, short-term and repaid directly from customers' accounts," declared Rebecca Borne of the Center for Responsible Lending (CRL). "None of that has changed." The organization believes that about a third of U.S. consumers are choosing overdraft services under the Fed rule; while Moebs estimates the opt-in rate on the high end at 77 percent and the Consumer Bankers Association puts it at the low end at about 17 percent. Cordray also said that the CFPB is considering whether conflicting rules from different federal regulators harms oversight of overdraft fees.
- Susquehanna Latest Bank to Settle Excessive Overdraft Fees Litigation
Philadelphia Business Journal 27 Feb 2013
Susquehanna Bancshares in Lititz, Pa., has settled a lawsuit with customers who challenged the company's overdraft fee policy. Without admitting wrongdoing, the bank agreed to pay about $3.7 million to settle the litigation. Consumers have sued a number of banks, claiming that they wrongfully shuffled the order of debit card processing and ATM transactions as a way to maximize fee revenue. Bank of America, Citizens, PNC Bank, and TD Bank are among those that have settled or are seeking court approval of settlements.
- Bank Fees Are Rising for Checking Accounts, Overdrafts, ATMs
St. Louis Post-Dispatch 19 Feb 2013
A new survey by MoneyRates.com has found that bank fees are on the upswing. The average monthly fee for a checking account is up 18 cents to $12.26 over the past six months, while overdraft fees have also grown 18 cents to reach an average of $30.01. The fee for non-customers using an ATM has risen 20 cents to $2.60. On a positive note, MoneyRates said that 37 percent of checking accounts charge no fee at all. Fees at online-only banks are generally holding steady, while fees associated with banks with branches are climbing. For the study, MoneyRates surveyed the 50 largest U.S. banks as well as 50 medium and smaller-sized banks.
- First National Bank Won't Change Way It Processes Transactions
Pittsburgh Post-Gazette 13 Feb 2013
A U.S. District Court has granted preliminary approval to a settlement with First National Bank (FNB) of Pennsylvania over its practice of processing customer debits from highest amount to lowest. Consumer advocates complain that the policy incurs the maximum amount of overdraft fees and depletes customer accounts faster. While other banks targeted in similar lawsuits have promised to process transactions in chronological order, FNB will maintain high-to-low sequencing. However, it will step up customer disclosures to explicitly explain how the posting order for checks, debit transactions, ATM activity, and point-of-sale purchases could result in "the imposition of additional fees." FNB also will establish a $3 million fund, less one-third for attorney fees, for customers who were hurt by the high-to-low policy between June 1, 2006, and Feb. 8, 2013.
- The Tightrope Between Checking Account Fees and Consumer Defections
The Financial Brand 11 Feb 2013
Many consumers of retail financial institutions are willing to make compromises; and about half of them would rather pay for banking services one transaction at a time, à la carte. In a new survey, the Deloitte Center for Financial Services calculated that 48 percent of consumers would consider paying 25 to 75 cents per transaction, rather than a fixed monthly fee ranging between $15 and $30. The finding indicates consumers' preference for more transparency. Another 40 percent of survey respondents were interested in a digital banking plan that would offer reduced fees while providing a limited level of in-person services. Older respondents were more favorable toward high balance requirements, while younger respondents were more supportive of a discount for favorable social media activity. However, many consumers believe that banks are unfair in raising fees and say they will switch institutions if fees go up on existing services. Communication and transparency with customers remains vital for financial institutions.