New House Bill Tackles Overdraft Fees
On Monday, it was Sen. Chris Dodd (D-Conn.) unveiling legislation to rein in overdraft fees. Today it’s Reps. Carolyn Maloney (D-N.Y.) and Barney Frank
Jul 31, 2020103.6K Shares2.1M Views
On Monday, it was Sen. Chris Dodd (D-Conn.) unveiling legislation to rein in overdraft fees. Today it’s Reps. Carolyn Maloney (D-N.Y.) and Barney Frank (D-Mass.) doing the same.
Both bills would require banks to get customer consent before enrolling them in the overdraft protection program; both would cap the number of overdraft fees at six per year; both would require banks to notify customers beforehand when a purchase or ATM withdrawal is set to trigger an overdraft fee; and both would prohibit banks from re-ordering transactions for the purpose of maximizing the number of fees.
One significant distinction between the chambers’ bills: the House proposal would also apply to written checks that overdraw an account, not just debit purchases that exceed balances. The Senate bill excludes checks as it applies to the opt-in provision.
There’s a lot at stake here — both for consumers and the banking industry — as overdraft fees have evolved into an enormous money-maker for the banks. This year alone, the banks are expected to reap more than $38 billion in overdraft charges, according to Moebs Services, an Illinois-based financial research firm.
Translation: Don’t expect the industry to take this one sitting down.
Hajra Shannon
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