ATTORNEY GENERAL RAOUL WARNS CFPB THAT WEAKENING DEBIT CARD OVERDRAFT FEE RULE WILL HARM CONSUMERS
Chicago — Attorney General Kwame Raoul, along with a coalition of 25 attorneys general, today submitted a comment letter opposing any effort by the Consumer Financial Protection Bureau (CFPB) to roll back or limit its Overdraft Rule. The rule 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 in to such services.
“I believe in the importance of fully-informed consumer choice about the costs, benefits and risks of financial products, Raoul said. “The Overdraft Rule ensures consumers have a fair opportunity to make an informed decision related to overdraft services for transactions, and any decision to limit this rule will harm millions of consumers.”
In the letter, Raoul 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 data or research to demonstrate any economic burden as a result of the Overdraft Rule.
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. In fact, some studies released by the CFPB have shown that median fees can cost as much as 68 percent of median overdraft transactions.
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.
Joining Raoul in filing the comment letter are the attorneys general of California, Colorado, Delaware, Hawaii, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and the District of Columbia, as well as the executive director of the Hawaii Office of Consumer Protection.