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Overdraft Fees

Overdraft Loans

Excessive overdraft fees charged by banks and credit unions can cause devastation for financially vulnerable families. Many lenders used predatory policies and practices designed to repeatedly extract excessive fees from customers who could least afford them. Overdraft fees are a leading cause of financial institutions closing a consumer’s account and reentry into the banking system often is exceedingly difficult, increasing the financial insecurity of many consumers. CRL advocates for legislators and regulators to rein in the size and frequency of these fees. We estimate that the savings from these fee eliminations will be between $3 billion to $4 billion for working families.

Filter Results

Tuesday, June 2, 2020

Overdraft Fees: Banks Must Stop Gouging Consumers During the COVID-19 Crisis

A review of 2019 data shows that big banks continue to collect over $11 billion in overdraft related fees each year. Banks engage in a number of abusive practices that combine to drain massive sums from their customers’ checking accounts. The large majority of these fees are shouldered by banks’ most vulnerable customers, often driving them out of the banking system altogether. Bank overdraft fees cause particular harm to low-income consumers and communities of color, who are already disproportionately excluded from the banking mainstream. This report analyzes the 2019 overdraft-related...
Research
Overdraft Fees

Monday, April 6, 2020

Congress Should Halt Outrageous Bank Overdraft Fees During COVID-19 Crisis

Even during the best economic times, overdraft fees are a tremendous drain on working families and often cause irreparable harm. The fees compound into hundreds per year for banks’ most financially distressed account holders and some even end up spending over a thousand dollars in overdraft fees. They drive people out of the banking system altogether, which disproportionately harms people of color, who are already far more likely to be unbanked than white Americans. During this period of sustained un- and under-employment, overdraft fees could exponentially increase, siphoning off consumers’...
Policy & Legislation
Overdraft Fees

Monday, July 1, 2019

Protections Against Unfair and Abusive Overdraft Fees Should Be Strengthened

The 24 undersigned community, consumer, civil rights, and faith groups write regarding the Consumer Financial Protection Bureau (CFPB or the Bureau)’s review of the 2009 Regulation E overdraft opt-in rule under the Regulatory Flexibility Act (RFA). Weakening the opt-in rule in any way is clearly unsupportable; rather, protections against unfair and abusive overdraft fees should be substantially strengthened. Today’s overdraft fee practices undermine trust in this nation’s banking system, permitting banks to thrive by shattering the financial lives of their most vulnerable customers. Financial...
Comment Letter
Overdraft Fees

Monday, July 1, 2019

Comprehensive Reform of Unfair and Abusive Overdraft Practices Is Badly Needed

The considerations prescribed by the RFA strongly support strengthening protections against overdraft fees on debit card and ATM transactions. More broadly, comprehensive reform of unfair and abusive overdraft practices is badly needed. The RFA sets forth five factors to consider in an RFA review. Consideration of these factors in the opt-in rule context shows clearly that any effort to weaken the rule would be unwarranted, and, rather, protections against overdraft abuses must be strengthened. Moreover, consideration of these factors make clear that the opt-in rule should not be weakened for...
Comment Letter
Overdraft Fees

Wednesday, March 20, 2019

Abusive Overdraft Fees Drain Consumers Dry

Financial institutions drain billions of dollars annually from their customers through abusive overdraft fee practices. Frequently marketed as a “customer service,” overdraft fees are charged when a customer’s account lacks sufficient funds to cover a transaction and the institution pays the transaction anyway. The institution then repays itself the value of the overdraft transactions and all accompanying fees from the consumer’s next incoming deposit. In doing so, the institution jumps ahead of any other planned transactions. Banks typically charge these fees on debit card point-of-sale (POS)...
Research
Overdraft Fees

Tuesday, August 7, 2018

Unfair Market: The State of High-Cost Overdraft Practices in 2017

According to new data released recently by the FDIC, the largest banks in America collected $11.45 billion in overdraft and non-sufficient funds (NSF) fees from American consumers in 2017, an increase of approximately $10 million over the 2016 total. Overdraft fees often impose a great burden on those already living paycheck to paycheck, struggling to make ends meet. Typically, a small proportion of bank account holders pay a large proportion of total overdraft fees. Since 2015, the FDIC has collected and released information about these controversial penalty fees from banks that have $1...
Research
Overdraft Fees

Thursday, August 2, 2018

Support the Stop Overdraft Profiteering Act of 2018

The “Stop Overdraft Profiteering Act of 2018,” introduced by Senators Booker and Brown, would address extremely high-cost overdraft fees financial institutions charge on checking accounts. Banks’ overdraft practices exploit the financially vulnerable, leaving them worse off and driving many from the banking system altogether. The bill would establish reasonable safeguards for checking account holders; restore transparency to the checking account market; and ultimately encourage banks to expand responsible small dollar loan offerings rather than perpetuate this harmful practice.
Research
Overdraft Fees

Monday, August 28, 2017

Amicus Brief in Roberts v. Capital One Financial Corporation

The Center for Responsible Lending (CRL), National Consumer Law Center (NCLC), and New Economy Project filed an amicus brief in Roberts v. Capital One Financial Corporation , in support of the plaintiff, Tawanna M. Roberts, against Capital One’s misleading overdraft fee practice. In the brief, submitted earlier this month, the group urged the U.S. Court of Appeals for the Second Circuit to overturn a district court ruling in favor of the bank.
Amicus Brief
Overdraft Fees

Tuesday, June 20, 2017

Letter on Wells Fargo, CFPB & House Finance Committee Report

The Center for Responsible Lending (CRL) sent a letter to House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Ranking Member Maxine Waters (D-Calif.) rebutting the committee’s majority staff report criticizing the Consumer Financial Protection Bureau’s (CFPB) role in investigating Wells Fargo’s fraudulent account scheme.
Letters to Congress
Overdraft Fees

Tuesday, May 24, 2016

How Overdraft Fees Harm Consumers and Discourage Responsible Bank Products

An analysis of recently available data confirms that financial institutions continue to engage in abusive overdraft practices and that reform is urgently needed. This issue brief highlights five key concerns: Overdraft fees remain an enormous drain on checking account customers. Using newly available call report data as the starting point, we estimate that consumers pay nearly $14 billion annually in overdraft fees Research has consistently found that overdraft fees are disproportionately borne by a relatively small portion of account holders. Further, as an example from our data set of...
Research
Overdraft Fees

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