The Consumer Financial Protection Bureau (CFPB) says 14.3 percent of big bank customers had overdraft coverage in 2011 and 2012, and 8 percent of these consumers paid overdraft fees at least 10 times annually for an average yearly cost of $380. A coalition of consumer advocates is pressing for new restrictions on how banks market overdraft coverage to customers, having found that branch employees often do not clearly, correctly, or consistently explain how the fees are incurred and fail to explain customers' options.
The groups -- the Woodstock Institute, New Economy Project, California Reinvestment Coalition, and Reinvestment Partners -- sent mystery shoppers to 39 bank branches in Chicago; Durham, N.C.; New York City; and Oakland. Their findings reveal that some shoppers were given a choice between overdraft fees or a less expensive service that connects their savings account to their checking account so funds can be transferred when an overdraft occurs. However, they often were not told that they could opt out of both services.
The consumer groups would like to see the CFPB adopt sweeping restrictions such as prohibiting high-to-low processing of account debits and banning all overdraft fees triggered by an ATM withdrawal or debit card purchase. In lieu of that, they would at the very least ask that the regulator block banks from offering financial incentives to branch employees for the sale of overdraft products; create a uniform standard for how banks should verbally describe overdraft fees; and implement mandatory training on that verbal standard for branch employees.