Published: July 2019

Don’t water down banks’ overdraft opt-in rule

For many banks, overdraft fees are a huge source of income, despite regulations that sought to restrict banks from charging them unless customers opted into overdraft protection coverage. Now the CFPB is reviewing the overdraft rule and asking for input. Advocates warn that relaxing the rule could be detrimental to consumers and their bank accounts.

Under the 2010 overdraft rule, financial institutions were restricted from charging a fee on a consumer’s account unless the consumer expressly opted in to the overdraft plan. Before the rule went into effect, many banks had automatically enrolled customers in overdraft coverage without their knowledge, sometimes costing them hundreds of dollars a month without their consent. The CFPB’s own 2014 report found that consumers who choose overdraft coverage pay seven times as many fees as those who forgo it. Currently, consumers who overspend and are not enrolled into overdraft protection coverage have their transactions denied if they don’t have sufficient funds in their accounts.

Lead Organization

American's for Financial Reform (AFR)

Other Organizations

Allied Progress | Americans for Financial Reform Education Fund | Atlanta Legal Aid Society, Inc. | California Reinvestment Coalition | Center for Economic Integrity | Center for Responsible Lending | Consumer Action | Consumer Advocacy and Protection Society (CAPS) | Consumer Federation of America | Empire Justice Center | Legal Services of New Jersey | National Association of Consumer Advocates | National Consumer Law Center (on behalf of its low income clients) | National Fair Housing Alliance | Public Citizen | Public Counsel | Public Good Law Center | Public Justice Center | Reinvestment Partners | The Consumer Assistance Council, Inc. | Tzedek DC | U. S. Public Interest Research Group | William E. Morris Institute for Justice | Woodstock Institute

More Information

For more information, please visit AFR.

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Don’t water down banks’ overdraft opt-in rule   (OverdraftShortJointSignOn.pdf)




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