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WASHINGTON, DC – Government watchdog Accountable.US applauded the Consumer Financial Protection Bureau’s announcement today that stands to save consumers billions each year by taking the first step towards curbing abusive and surprise overdraft fees imposed by banks across the country. The guidance marks a major milestone in the CFPB’s initiative to boost the economy by eliminating exploitative “junk fees,” including overdraft fees.

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“Inflation challenges driven largely by corporate greed have already left consumers paying a high price. The last thing working families need is to be shaken down with surprise overdraft fees from greedy banks on top of it all – like a $35 fee for a gallon of milk or loaf of bread. Yet it’s happening thousands of times a day. Billions of dollars in pointless penalties and fees are being siphoned from the economy, money that could be otherwise spent on goods and services that create jobs rather than pad big banks’ bottom line. Cracking down on overdraft fees would be a major win for the economy and consumers, particularly working families who are disproportionately preyed upon under this indefensible practice.”

Liz Zelnick, A.US’ Director of Economic Security and Corporate Power

A recent analysis from Accountable.US found that in the first half of 2022, three of the largest “megabanks”—Bank of America, Wells Fargo, and JPMorgan Chase—have reported over $37 billion in net income while reaping at least $7.8 billion in revenue from service charges on consumers’ deposit accounts, including over $1.6 billion from overdraft fees. Meanwhile, these three banks have spent $25.7 billion on stock buybacks and shareholder dividends representing 69.4% of their net income over this same period.

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Make no mistake: big banks and small banks alike would still be profitable without targeting low-income families with exploitative fees. Admitting this reality, many banks have already done away with the practice, but some of the smaller institutions have only doubled down on the backs of consumers. That’s why the CFPB’s proposed effort to rein in this predatory behavior is absolutely necessary."

Liz Zelnick, A.US’ Director of Economic Security and Corporate Power

While the finance industry lauds overdraft as a service that “saves customers money” and incentivizes consumers to “monitor and manage” their finances, the practice continues to target low-income consumers, who are often living paycheck-to-paycheck, with exorbitant fees. The CFPB’s new guidance will curb the industry’s abusive behavior by providing clear guardrails on what practices will not be tolerated by the Bureau.

Meanwhile, as the CFPB ramps up its actions to eliminate overdraft fees, business groups like the U.S. Chamber of Commerce are frantically trying to weaken the agency’s rulemaking power by filing a lawsuit to reverse its new crackdown on discrimination in the industry. 

OVERDRAFT RESEARCH FROM ACCOUNTABLE.US

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