Attorney General Jim Hood joined 24 other Attorneys General this week in opposing any effort by the Consumer Financial Protection Bureau (CFPB) to roll back or limit its ‘Overdraft Rule’.
The rule, currently in place, permits banks to charge fees to consumers for overdraft services on ATM and one-time debit transactions only after consumers have been provided with important information about those services and fees in a model notice, and only after those consumers have made the affirmative choice to opt into such services.
“People deserve to know what’s happening with their bank accounts, and if the CFPB rolls back this rule, it will take away that transparency,” General Hood said. “Data has shown that this rule has helped consumers, so it needs to stay in place.”
The Overdraft Rule — which went into effect in 2010 — recognized that many consumers received overdraft services by default, but were never given clear information about their options and the fees their financial institutions charge. According to Hood, some studies released by the CFPB have shown that median fees can cost as much as 68 percent of median overdrafted transactions. For example, when the median overdrafted transaction was $50, the median fees charged were $34.
The CFPB’s data shows that only about 16 percent of consumers have chosen to affirmatively opt into overdraft services under the Overdraft Rule, which has benefitted millions of Americans and led to a significant reduction in the total number and amount of overdraft fees.
In their letter, the attorneys general specifically emphasized that there is no basis to believe that the Overdraft Rule would place any additional economic burden or cost on small financial institutions, and that compliance has both been straightforward and used a model form designed for simplicity and cost-savings. Inversely, the CFPB has not published any data or research to demonstrate any economic burden as a result of the Overdraft Rule.
Joining General Hood in submitting comments to the CFPB were the attorneys general of California, Colorado, Delaware, the District of Columbia, Hawaii, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington, as well as the Executive Director of the Hawaii Office of Consumer Protection.
The full comments can be seen here – Attorneys General Comment on CFPB Overdraft Rule