CFPB criticizes small banks for their “dependence” on overdraft fees
The Consumer Financial Protection Bureau (CFPB) said it ‘take action’ on overdraft fees and “Improve its monitoring and enforcement control of banks that rely heavily on overdraft fees.” “
The report which was released with the data on maintenance fees and ATM fees, used information provided by the main processors from 2014.
The CFPB noted that these data “May not always reflect current practices and results”, but represent “The most detailed and extensive quantitative data the bureau or others has collected on overdraft practices in small institutions.”
Rohit Chopra, director of CFPB, said the office “take action“on overdraft fees, and said the office intends to “Strengthen its monitoring and enforcement control of banks which depend heavily on overdraft fees”.
A statement by the American Bankers Association (ABA) challenged the bureau’s findings and its criticism of the banking industry.
Rob Nichols, President and CEO of ABA, said: “Research released today by the CFPB paints an unrecognizable picture of the world’s largest and most diverse financial services market.
“Banks across the country offer no-overdraft account options, including certified Bank On accounts available at institutions representing more than 50% of the deposit market share in the United States. Indeed, as the CFPB’s own research shows, overdraft fees and insufficient funds decreased by 26.2% in 2020. “
Nichols emphasized that banks are committed to helping clients fully understand to make informed choices about overdraft options.
“Under federal rules, customers can only get protection against bank overdrafts and ATMs by signing up, and they can opt out at any time.” he added. “Banks provide customers with several tools to help them manage their accounts and avoid overdrafts, including text alerts on low balances and the ability to monitor their accounts digitally. “
Nichols said a more comprehensive CFPB analysis would have provided “Important context” which would have better informed consumers about the choices available to them.
“The study released today unfortunately uses dated information to unfairly criticize banks for providing services that many Americans appreciate and appreciate.” he said.