Consumer Financial Protection Bureau (CFPB) announced in late February that it
is launching an investigation into how banks charge overdraft fees. It also is
requesting public comment on a special disclosure box it wants to include on
monthly bank invoices to ensure that customers clearly understand the
penalties. Bank of America, for one, is making a killing from these fees; even
though the bank caps the number of overdraft fees it charges daily on an
account to four, at $35 per charge that amounts to as much as $140 per day.
BB&T, meanwhile, caps the number of overdraft fees it can charge a day to
eight -- which at $40 per charge can leave a bank customer out $280, and
significantly more if the charges continue to roll over. Consumer advocates say
nearly 85 percent of overdraft fees are charged to fewer than 10 percent of
banking customers, but these charges give banks billions of dollars in annual
revenue. Frequent overdraft perpetrators tend to be young bank customers who
have less money than the average account holder, consumer advocates say.
"Overdraft practices have the capacity to inflict serious economic harm on
the people who can least afford it," CFPB director Richard Cordray said in
a statement. "We want to learn how consumers are affected and how well
they are able to anticipate and avoid paying penalty fees."