CRL supports the principles laid out in the OCC's proposed guidance on overdraft and bank payday loans, but hopes the OCC will dramatically strengthen its guidance to address existing problems and to avoid inadverdently entrenching abuses. Among our recommendations, CRL urges the OCC to act quickly and decisively to stop payday lending before it becomes pervasive among banks. CRL also urges the agency to stop its banks from posting transactions in order from highest to lowest to increase overdraft fees.
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.
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Better Overdraft Policies Put Money Back In Consumers' Pockets Regulators Must Stop Remaining Overdraft Abuses A new study by Market Rates Insight finds that Americans saved $1.6 billion in overdraft fees in 2010 after the "opt-in" rule took effect last summer. Once banks were required to get explicit permission before approving debit card overdrafts for a fee, most Americans said, "No, thanks." Since then, even during these tough economic times, customers' account balances have increased, while service fees have decreased. Unfortunately, abusive overdraft practices that cost tens of billions...
Survey finds low opt-in rate, high number of misperceptions Download the complete survey (PDF) >> When it came to convincing customers to opt in to high-cost overdraft coverage, it was as if the banks rigged the election but still lost the vote. A Center for Responsible Lending survey indicates that most consumers do not want high-cost overdraft coverage for their checking accounts, and that opt-ins are largely based on aggressive and misleading marketing, rather than clear and accurate information from banks. Many banks routinely cover any transaction that overdraws a customer's account...
Download this ruling (PDF) >> An 11th Circuit Court held that an arbitration clause was unenforceable in a suit charging BB&T with reordering debit card transactions to boost bank overdraft fees.
And guess what! That's a GOOD thing. Bank of America and Citibank cover debit card and ATM overdrafts only if their customers have signed up for more reasonably priced coverage, by linking their savings or line of credit to their checking account. Q: Why is this A GOOD THING? No more surprise high-cost overdrafts at the ATM or checkout for customers of these banks. These two banks are so big, it means one third of debit card transactions made each year are not subject to these high-cost fees. Since Bank of America and Citibank are doing it, more banks and credit unions may follow in order to...
The Center for Responsible Lender added its signature to a letter from national consumer organizations asking the Office of the Comptroller of the Currency (OCC) to adopt stricter overdraft guidelines. Practices that need to be addressed include enrolling customers in fee-based overdraft when they qualify for much lower-cost coverage, charging excessive fees in amount and frequency, re-ordering transactions to maximize fees and deceptive solicitations.
Download the joint letter >> CRL and a cross-section of civil rights, labor, consumer, housing, community, business, and sustainable and responsible investor groups sent a joint letter to the FDIC expressing support for bringing attention to abusive overdraft practices. The groups support the agency's common-sense recommendations for actions banks should take to treat their customers more fairly while offering recommendations for how the FDIC could further address its banks' deceptive practices. Specifically, the groups support the FDIC for recognizing that charging a customer more than six...
CRL and other consumer advocates filed a comment letter with the FDIC supporting most aspects of the agency's proposed guidance on overdraft. The groups also made recommendations on how the agency could go even further in protecting consumers from excessive overdraft fees. Here is the summary of key recommendations from CRL, Consumer Federation of America, National Consumer Law Center, Consumer Action, Consumers Union, National Association of Consumer Advocates and U.S. PIRG. KEY RECOMMENDATIONS: End excessive overdraft fees at FDIC-supervised banks: Require that any account holder who chooses...
In August 2010, Wells Fargo was ordered to reimburse its California customers $203 million in debit card overdraft fees triggered solely by transaction reordering between November 2004 and June 2008.