RSSBanks must prove they have secured consumer buy-in before charging overdraft fees, according to recently published guidance from the Consumer Financial Protection Bureau.
According to the bureau, banks have charged overdraft fees for ATM and one-time debit card transactions despite not having documented consent from customers. Financial institutions also allegedly “created serious obstacles” for consumers to prepare for and avoid overdraft expenses.
The Electronic Fund Transfer Act bans banks from charging overdraft fees on ATM and one-time debit card transactions unless consumers have opted in.
“Consumer protection law enforcers should assume consumers have not opted into overdraft unless the banks can prove otherwise,” according to the bureau. “The CFPB has found that some banks have been unable to provide such evidence before they charged consumers fees for overdraft loans to cover ATM and one-time debit transactions.”
In 2022, the CFPB fined Regions Bank $191 million for charging illegal overdraft fees. The following year, the bureau fined Atlantic Union Bank $6.2 million for improperly enrolling customers in overdraft programs. The bureau has also fined TD Bank and TCF National Bank for similar violations. Earlier this year, the CFPB proposed requiring the country’s largest banks to apply consumer protections, including interest rate disclosures, to overdraft loans.
“The CFPB has found instances where banks have no evidence that they obtained consent for overdraft,” said CFPB Director Rohit Chopra. “No Americans should be hit with bank account fees that they never agreed to.”
