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The Overdraft Protection Act Would Curb Abusive Bank Overdraft Practices

Wednesday, June 30, 2021
Rebecca Borné

WASHINGTON, D.C. -- Rep. Carolyn B. Maloney (NY-12) today introduced the Overdraft Protection Act of 2021. This legislation, aimed at establishing fair and transparent practices related to provision of overdraft coverage programs, would provide strong consumer protections and protect vulnerable populations from abusive bank practices.

Center for Responsible Lending (CRL) Senior Policy Counsel Rebecca Borné released the following statement:

We applaud Congresswoman Maloney for her efforts to curb abusive overdraft fees imposed by banks, which disproportionately affect low-income and Black and Latino families.

For far too long, our nation’s checking account system has been fundamentally broken. Banks charge unreasonable overdraft fees, multiple fees per day, and extended fees when a consumer cannot quickly bring their account back to positive, and otherwise use manipulative posting practices to maximize their fees. Even during an economic and health crisis, banks, with few exceptions, have not relieved people from overdraft fees that drain billions from their customers’ accounts each year. This is a hugely harmful practice in which the fees pile up to the point that families are knocked out of the banking system altogether.

We urge legislators to support the Overdraft Protection Act of 2021 in order to establish reasonable rules of the road and stem the tide of abusive overdraft practices that hurt the most vulnerable families.

The legislation would require that overdraft fees be reasonable in size and stop banks from charging an unlimited number of these fees. In addition, it would prohibit institutions from charging overdraft fees on transactions that result from a debit hold placed on an account that exceeds the actual dollar amount of the transaction. It would prohibit institutions from posting transactions in an order that is designed to maximize overdraft and nonsufficient fund fees. And it requires clear and conspicuous overdraft coverage disclosures.

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Press Contact: carol.parish@responsiblelending.org