If banks had boots, mayhap they’d be quaking them right about now: the Consumer Financial Protection Bureau is on the case, reviewing nine U.S. banks over their practices to see if they’re on the up and up when it comes to charging overdraft fees.
Regulators gave Americans more power over managing overdraft protections for the checking accounts two years ago, notes Bloomberg, and the CFPB just wants to make sure if that crackdown on banks was good enough.
The CFPB will reportedly determine by the end of this year whether new rules are in order for banks including JPMorgan Chase, Wells Fargo and Bank of America Corp. The inquiry will look into how those institutions are pushing customer to enroll in overdraft programs, by checking out online and mailed marketing material and the scripts used by customer service representatives.
If any of that stuff is confusing to consumers, the CFPB probably isn’t going to like it. Consumers could benefit from stricter rules, but banks will likely groan over anything that will threaten another of their revenue streams. Banks charged customers $31.6 billion in overdraft fees last year, down from $33.1 billion in 2010.
The size of the overdraft fees will also be probed, to see if banks are justified in what they charge. Many large banks levy $35 per overdraft, while smaller banks and credit unions routinely charge $25. And since around 15 million of us overdraw our accounts 10 or more times a year, that’s a nice chunk of change for those financial institutions.
Mary Beth Quirk