Overdraft Protection Act

Legislation | Documents/Reports | Links

Along with many of my Democratic colleagues, I have introduced the Overdraft Protection Act.

Financial institutions have increasingly used overdraft “protection” plans in a way that is deceptive and unfair to consumers, despite a Federal Reserve Rule that required financial institutions to obtain consumers’ consent to opt into overdraft coverage. The problem is significant. The FDIC reports that the vast majority of large banks enroll consumers automatically in overdraft plans, charge an average of $35 per overdraft, and many manipulate the order transactions to post in a way that maximizes overdraft fees to the bank.

A recent report by Moebs Services, estimates that banks and credit unions raked in nearly $32 billion in overdraft income in 2011, as fees rise 17% in the last five years. And when individual overdraft fees are calculated in the form of an interest rate, the annualized rate can be as high as 5,000 percent. As the New York Times Editorial Page puts it, there is a vital role to play,

The Overdraft Protection Act will help protect consumers by:

  • Requiring overdraft fees to be reasonable and proportional;
  • Limiting overdrafts to one per month and 6 per year;
  • Codifying the opt-in provisions that the Fed promulgated requiring that consumers opt-in to overdraft coverage;
  • Prohibiting institutions from manipulating the order of transactions to maximize overdraft fees; and
  • Adding additional disclosures to consumers about overdraft coverage programs

I have introduced overdraft protection legislation in each Congress since 2005. This new legislation differs from those earlier bills by directing the Consumer Financial Protection Bureau to study pre-paid card overdraft programs and limiting the number of overdraft fees a consumer can incur.

By capping the number of overdraft fees the financial institution can charge, rather than placing any new requirements at point-of-sale, we maximize protections to consumers and minimize the impact on retailers during the current recession.


03/19/13 - Overdraft Protection Act of 2013 (H.R. 1261)

05/09/12 - Overdraft Protection Act of 2012 (H.R. 5691)

10/22/09 - Overdraft Protection Act of 2009


06/11/13 - Consumer Financial Protection Bureau Study of Overdraft Programs

05/09/12 - Stop the $35 cup of coffee with the Overdraft Protection Act

05/2012 – Overdraft America: Confusion and Concerns about Bank Practices

07/2011 – Checking Account Customers Support Stronger Banking Regulations

04/2011 – Pew Center Report for Safe and Transparent Checking Accounts

10/2009 – Center for Responsible Lending Report: Overdraft Explosion

10/06/09 – Center for Responsible Lending Report “Overdraft Explosion: Bank Fees for Overdrafts Increase 35% in Two Years”

09/17/09 – Podcast: Sirius Radio Interview on Overdraft Fees 

11/2008 – FDIC Study of Bank Overdraft Programs

08/14/08 – Maloney/Frank Comments to Fed/FDIC/OTS on Strengthening Consumer Protections for Overdraft Programs

01/2008 – GAO Study on Bank Fees: “Federal banking Regulators Could Better Ensure That Consumer Have Required Disclosure Prior to Opening Checking or Savings Accounts” 

07/11/07 – Center for Responsible Lending Report “Out of Balance: Consumers Pay $17.5 Billion per year in Fees for Abusive Overdraft Loans”


05/08/12 – NYT Editorial: How Much For That Coffee?

05/04/12 – Overdraft Fees Hit Unsuspecting Consumers

04/29/12 – NYT: Profits Are the Reason for Fees, Not Risk or Costs

04/20/12 – Banks Examined on Overdraft Fees

02/26/12 – NYT Editorial: A Further Look at Overdraft Fees

02/25/12 – NYT Blog: Bucks, Penalty Alert on Overdrafts

11/29/11 – NYT Editorial: Some Thoughts for the Shopping Season

10/07/11 – Revenge of the Gougers

12/26/11 – NYT Editorial: Clearer Bank Account Terms

08/20/09 – NYT Editorial: Debit Card Trap 

More on Overdraft Protection Act

Sep 10, 2014 Press Release

WASHINGTON – Congresswoman Carolyn B. Maloney (D-NY) today urged Consumer Financial Protection Bureau Director Richard Cordray to act immediately to curb abusive overdraft fees. Maloney, who authored the Credit Card Accountability Responsibility and Disclosure Act of 2009, says the CFPB has the authority to limit overdraft fees charged to bank accounts in the same way her bill limited similar fees on credit card transactions. The Congresswoman called for two specific actions by the CFPB: a limit on overdraft fees and expanded opt-in requirements.

Jul 31, 2014 Press Release

WASHINGTON – Congresswoman Carolyn B. Maloney (D-NY) is calling for the House to consider legislation she introduced to end abusive overdraft fees after a new report from the Consumer Financial Protection Bureau found that, in lending terms, certain overdraft fees are tantamount to a 17,000 percent annual percentage rate (APR).

Apr 10, 2014 Press Release

WASHINGTON – A new report from Pew Charitable Trusts highlights the urgent need for the Overdraft Protection Act (H.R. 1261), a bill introduced by Congresswoman Carolyn Maloney (NY-12) to protect consumers from excessive overdraft fees. The new report shows that a quarter of the nation’s financial institutions allow consumers to overdraw their accounts using automatic teller machines and charge excessive fees as a penalty. Half of financial institutions will reorder a consumer’s transactions to unfairly generate multiple overdraft fees. Both problems would be addressed by Maloney’s Overdraft Protection Act. 

Jun 15, 2013 Press Release

New York, NY – Congresswoman Carolyn Maloney (D-NY) is on guard again for hardworking consumers who are being hit with over-the-top overdraft fees from some financial institutions. Congresswoman Maloney has been ahead of the curve on this issue, having introduced legislation in every Congress since 2005. But with the recent release of a Consumer Financial Protection Bureau (CFPB) Report that revealed that a few bad apples in the banking industry are slamming consumers with unreasonable overdraft fees, and using deceptive enrolling practices, Congresswoman Maloney is compelled once again to demand that Congress stand up for consumers and pass her Overdraft Protection Act bill.

Mar 29, 2013 Press Release

If you ask around, it's pretty easy to find someone who has a bank account overdraft horror story to tell.

Nine out of ten adult Americans have a checking account. It's the most widely used financial services product in the United States. And according to a survey by Pew's Safe Checking in the Electronic Age project, about 18 percent of those with checking accounts have been hit in the past year by an overdraft fee.

Mar 20, 2013 Press Release

WASHINGTON, DC – Rep. Carolyn Maloney (D-NY), senior member of the House Financial Services Committee, along with Rep. Maxine Waters and 44 other cosponsors, today announced the introduction of the “Overdraft Protection Act”, H.R. 1261, at an event outside the House chambers. The bill would require a bank or other financial institution to obtain a consumer’s affirmative opt-in to any overdraft protection plan and also require clear disclosure of coverage and “reasonable and proportional” fees, would ban the manipulation of transaction posting order in a way that maximizes fees paid to the institution, and would cap the number of fees that can be assessed to a maximum of one per month and six per year.

Jun 19, 2012 Press Release

WASHINGTON, DC – Rep. Carolyn Maloney (D-NY), senior member of the House Financial Services Committee, today applauded JPMorgan Chase for new overdraft policies:

May 9, 2012 Press Release

WASHINGTON, DC – Rep. Carolyn Maloney (D-NY), senior member of the House Financial Services Committee, along with 46 cosponsors, this week introduced the “Overdraft Protection Act” which would require a consumer’s affirmative opt-in to overdraft plans with clear disclosure of coverage and fees, require overdraft fees be “reasonable and proportional” to the cost of the transaction, limit the quantity of fees that can be charged to one per month and six per year, improve notice to consumers when an overdraft is incurred, and ban the manipulation of transaction posting order in a way that maximizes fees paid to banks.