Press Releases
March 11, 2014
The Center for Responsible Lending (CRL) applauds Bank of America for taking another important step that prevents costly overdraft fees for consumers. "Overdraft fees have a punishing impact on financially vulnerable Americans, often ousting them from the banking system altogether," said Gary Kalman, executive vice president of CRL. "CRL commends Bank of America for offering a more responsible approach to banking." Over the last 15 years, overdraft programs have evolved from an occasional courtesy to a practice designed to extract fees from consumers. Revenue from overdraft fees doubled...
July 30, 2013
Many banks and credit unions continue to charge abusive fees on debit cards and checking accounts, according to a new report by the Center for Responsible Lending. "High-Cost Overdraft Practices" finds that, in spite of regulatory changes in recent years, consumers paid more than $16 billion in fees during 2011, many triggered by manipulative banking practices. Debit cards carry fees that are the most disproportionate to the amount of the overdraft, even though banks and credit unions can simply decline these transactions without charging any fee at all. Some financial institutions do...
July 22, 2013
For years many banks and credit unions have manipulated the order of debit and checking transactions to trigger more overdraft fees. In spite of consumer complaints, media attention and costly litigation, some financial institutions persist in this practice. We commend Senator Sherrod Brown for proposing a bill that would stop this sleight-of-hand trick once and for all.Not all banks and credit unions engage in reordering manipulation, but the practice remains widespread. Unfortunately, those that resist responsible and ethical practices undermine the American public's trust in all of our...
June 11, 2013
We are pleased the Consumer Financial Protection Bureau (CFPB) has begun an extensive analysis of bank and credit union overdraft programs. Overdraft fees—many of them encouraged and generated through unfair and deceptive practices—cost consumers billions of dollars each year. Overdrafts are a particular problem when consumers use a debit card to make purchases or withdraw cash from ATMs.
The CFPB report shows that requiring banks and credit unions to secure a consent form before charging customers overdraft fees on debit cards—the so-called "opt-in"—has not...
June 13, 2011
New guidelines proposed by the Office of the Comptroller of the Currency (OCC) illuminate the abuses in banks' overdraft and payday lending practices but don't go far enough to bring lenders back in line. As a result, the OCC's proposal risks legitimizing national banks' abusive payday lending and overdraft fee practices.
The "safety and soundness" that the OCC holds as a high priority for banks goes hand in hand with prudent consumer safeguards. Banks risk damaging their reputation when they unfairly strip funds from customers. That hurts shareholders as well as families.
The OCC...
April 26, 2011
Banks use scare tactics and other misleading practices to persuade consumers to opt into high-cost overdraft programs for debit card purchases, a new CRL survey finds. Even so, the survey finds, most consumers choose not to opt in. The survey results contradict claims that consumers overwhelmingly want to sign up to pay nearly $35 on average each time they overdraw their checking account by a small amount with their debit card. See the full report.
The survey finds that of the 33 percent of respondents who did opt in:
Sixty percent said an important reason they did so was to avoid a...
April 5, 2011
A positive move by one of the nation's biggest banks this week highlights the extent of overdraft abuse within the financial system and should encourage bank regulators to undertake further reform.
In response to consumer feedback, Citibank announced it will begin clearing checks from lowest to highest to minimize overdraft fees. That will be a departure from clearing check transactions in high-to-low order, a common banking practice that creates more overdraft fees by emptying the account faster. This decision makes Citibank unusually active among our nation's largest banks in...
April 4, 2011
We renew our call for bank regulators to do their job by protecting consumers from abusive debit card overdraft practices. Bankers' whining about minor reforms should not slow the progress of prudent banking policy. As the subprime mortgage fiasco shows, bad policy allows bad practices that hurt not only borrowers, but investors, taxpayers and the banks themselves.
The FDIC has taken an important step by requiring, among other things, that banks inform their frequently overdrawn customers of cheaper overdraft alternatives. Its new guidance warns FDIC-supervised banks against allowing...
March 15, 2011
Some of the biggest banks in the nation still collect excessive fees from American families by encouraging overdrafts and manipulating their customers' accounts. Recent comments in the media suggesting that Americans overwhelmingly choose this costly product are suspect, in part because they overlook millions of customers at banks that do not offer the costly option for debit card transactions. These reports also ignore the impact of heavy-handed and deceptive marketing by banks who have sold costly overdraft "protection" as a beneficial program.
Bank of America and Citibank, the #1 and #4...
November 24, 2010
Statement by CRL President Mike Calhoun:
"Today the Federal Deposit Insurance Corp. set a standard other regulators should follow when it issued guidelines advising banks to stop reordering transactions to maximize overdraft fees, particularly on debit cards.
Unfair transaction posting—especially the practice of reordering checks and debit card transactions to deduct the largest checks and charges first—significantly increases the number of overdraft fees customers are charged. Customers are charged a separate fee—usually about $35 per item-for each charge that is posted to an overdrawn...