The Consumer Financial Protection Bureau just wrapped up a public comment period on a rule that extends some protections to consumers who overdraw their checking accounts. The CFPB must examine the rule under a federal law that requires agencies to review rules that might affect small businesses.
Before the Federal Reserve Board set the 2009 overdraft rule, banks could automatically enroll people in overdraft protection and slap them with a fee — typically around $35 per transaction. With the rule in place, people can choose to have banks reject purchases at the point of sale instead to avoid those fees.
Consumers who opted for overdraft protection paid $11.5 billion in fees last year, according to the Pew Charitable Trusts.
“There is enough regulatory protection and guidance and scrutiny as it relates to overdraft services,” said Rhonda Thomas Whitley, vice president and regulatory counsel for the Independent Community Bankers of America.
Some banks get away with too much even with the overdraft rule in place, according to Deborah Goldstein, executive vice president of the Center for Responsible Lending.
“They often use misleading advertising to convince people to opt in,” she said. “We also think the fees are very expensive.”
The CFPB expects its review to be completed by November.