Consumer Financial Protection Bureau (CFPB) officials said a report generated by the organization determined banks continue to rely heavily on overdraft and non-sufficient funds (NSF) revenue.
NSF revenue reached an estimated $15.47 billion in 2019, with JPMorgan Chase, Wells Fargo, and Bank of America receiving 44 percent of total NSF revenue reported by banks with assets over $1 billion.
“Rather than competing on quality service and attractive interest rates, many banks have become hooked on overdraft fees to feed their profit model,” CFPB Director Rohit Chopra said. “We will be taking action to restore meaningful competition to this market.”
According to the CFPB, research showed small institutions with overdraft programs charged lower fees on average, and consumer outcomes were similar to that of larger banks while many of the fee harvesting efforts continued amid the COVID-19 pandemic.
The analysis maintained the overall market revenue from overdraft and NSF fees of $15.47 billion made up nearly two-thirds of reported fee revenue, demonstrating banks’ overarching reliance on the fees.
CFPB officials noted the organization would bolster its supervisory observation of
banks heavily dependent on overdraft fees. The CFPB recently directed TD Bank to pay $122 million in penalties and customer restitution while ordering TCF Bank to pay $30 million in penalties and restitution.