CFPB Launches Inquiry Into Overdraft Protection Programs
The Consumer Financial Protection Bureau (CFPB) has focused almost exclusively on lending, and specifically on real estate lending — there are several upcoming final rules targeting real estate lending disclosures and practices. Complying with these changes will take significant time and resources for your credit union’s lending department but alas, you will not be the only one significantly impacted by CFPB regulatory activity.
The CFPB recently announced that it has started to examine checking account overdraft programs and how these programs impact consumers. Its first step is to send a data request to selected large banks and a “Notice of and Request for Information” from the public. It will then gather this information, analyze it, and decide on the next steps, including new rules governing overdraft protection programs.
One of the key components of this initiative is the so-called “penalty fee box.” This disclosure would have to appear prominently on checking account statements. It would show how much was overdrawn and the fees assessed for doing so.
Among other concerns, the CFPB is looking into the extent to which consumers are aware of the fees incurred for overdrawing their accounts, and the various alternatives for covering overdraft transactions.