U.S. Rep. Carolyn Maloney (D-NY) will introduce a bill to establish fair and transparent practices for overdraft coverage programs and crackdown on unfair overdraft fees.
Maloney announced her intention to reintroduce the Overdraft Protection Act at last week’s Financial Services Committee virtual hearing titled Holding Megabanks Accountable: An Update on Banking Practices, Programs and Policies.
“I plan to soon reintroduce my legislation, the Overdraft Protection Act, to crack down on unfair, predatory overdraft fees. Bank overdraft fees are outrageously priced, predatory, and beyond the scale of what a reasonable charge should be for this service. And we know that these fees and practices are harming consumers and taking billions out of their pockets. According to an S&P Global Market [Intelligence] article from earlier this year, the larger banks collected $8.8 billion in overdraft fees ALONE and reported over $147 billion in net income in 2020,” Maloney said at the hearing.
Maloney said these overdraft fees hit hardest to those who can afford them the least.
“Each bank has slightly different policies, making this even more confusing to consumers. All your banks basically charge around $35 for EACH overdraft, but the worst of these fees can be on debit card transactions, where the overdraft averages $20 but comes with a $35 fee. Multiple transactions can quickly add up to where a consumer is charged well over $100 in fees alone,” Maloney said.