On June 11, 2013, the Consumer Financial Protection Bureau (CFPB) released a report on bank and credit union overdraft practices that raises concerns about whether the overdraft costs on consumer checking accounts can be anticipated and avoided. The report shows big differences across financial institutions when it comes to overdraft coverage on debit card transactions and ATM withdrawals, drawing into question how banks sell this account feature. The report also finds that consumers who opt in for overdraft coverage end up with more costs and more involuntary account closures.
As part of an on-going study, this month the CFPB asked Fiserv, a worldwide provider of financial services technology, to provide anonymous overdraft data for research purposes. If the CFPB finds that policies or practices do not protect consumers in accordance with federal consumer protection law, it will use its authorities to provide such protection. The goal is to make checking accounts more fair, transparent, and competitive and to ensure consumers are empowered to take control over their economic lives.
The CFPB, which has been raising issues over banks’ overdraft practices since 2012, is soon expected to announce new regulations to address the concerns.
Additional information may be found on the CFPB website here: http://www.consumerfinance.gov/newsroom/cfpb-report-raises-concerns-about-impact-of-overdraft-practices-on-consumers/