The proposal would amend Regulations E and Z and includes a benchmark for overdraft fees compared to bank costs. Comments are due by April 1.
01/18/2024 10:45 A.M.
2 minute read
The Consumer Financial Protection Bureau released a Notice of Proposed Rulemaking (NPRM) related to overdraft products, which would fundamentally alter the market.
The CFPB is proposing to apply the rule to only what it deems “very large” banks and credit unions with assets equal to or exceeding $10 billion. The agency estimates that roughly 175 financial institutions would be covered under the proposal, and also hinted at potential future additional coverage for smaller financial institutions by stating that it intends to “monitor the market’s response” before deciding whether to expand this scope to smaller entities in future rulemakings.
As part of the proposal, the CFPB is aiming to severely limit fees for overdraft services and is seeking feedback on setting benchmark fees from between $3 and $14.
The CFPB estimates that current fees are around $35, so this would be a significant shift to any programs currently offered by covered financial institutions. There are also some major shifts in how overdraft products are treated under Regulation Z and E.
Comments on the NPRM (PDF) are due on or before April 1.
Submit comments, identified by Docket No. CFPB-2024-0002 or RIN 3170-AA42, by any of the following methods:
- Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments. A brief summary of this document will be available at https://www.regulations.gov/docket/CFPB-2024-0002.
- Email: [email protected]. Include Docket No. CFPB-2024-0002 or RIN 3170-AA42 in the subject line of the message.
- Mail/Hand Delivery/Courier: Comment Intake—2024 NPRM Overdraft, c/o Legal Division Docket Manager, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552.
ACA’s Take
It’s expected President Joe Biden will address fees in his State of the Union speech on March 7.
ACA continues to advocate with regulators and Congress that the term “junk fee” does not have a legal definition and shouldn’t be used to classify all fees in the debt collection and financial services industries.
ACA is reviewing the comprehensive proposal on overdraft fees to determine any impact on the debt collection industry.
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