Maloney calls on Congress to stand up for consumers, pass Overdraft Protection Act

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Nick Moroni (212) 860-0606
(Left to right) Chuck Bell, Consumers Union; Rep. Maloney; Maryanne DeLeo, Astoria resident; Armando Chapelliquen, NYPIRG
Maloney calls on Congress to stand up for consumers, pass Overdraft Protection Act

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.

“While there is nothing intrinsically wrong with overdraft protection, the recent CFPB report confirms several of the long-held concerns that I have had regarding this issue. Some banks impose extremely high overdraft fees, which explains why the $35 cup of coffee is still very much with us. Further, the opt-in language needs to be clearer and we need to make sure that banks are not manipulating the order of transactions to maximize overdraft fees. Congress has a lot of work to do in restoring the faith of the American people, a new poll just showed. It can start immediately by standing up for everyday consumers – these are the people bearing the brunt of this practice – and passing my Overdraft Protection Act bill,” Congresswoman Maloney said.

Elected officials, consumers, and local and national consumer advocacy groups are supporting Congresswoman Maloney’s Overdraft Protection Act, and applaud her hard work and longstanding commitment to this issue:

“We strongly support Rep. Carolyn Maloney’s Overdraft Protection Act, which would improve disclosures to consumers for overdraft programs, and eliminate deceptive and abusive practices,” said Chuck Bell, Programs Director for Consumers Union, publisher of Consumer Reports magazine.  “Congress can help consumers save money by implementing fairer rules for overdraft programs that limit marketing tricks and bank fee-gouging. Overdraft fees have become a major revenue source for financial institutions, with banks earning more than $12.6 billion from this source in 2011 alone,” Bell said.  “Unfortunately, many ‘overdraft protection’ programs are really just a way for banks to bilk their most vulnerable customers with costly fees.  We believe that consumers should avoid opting in to these high-cost programs, and consider cheaper alternatives to avoid overdrafts.”

“I was hit with four or five overdraft fees in one day, even though I had deposited a check into my account that would have brought my balance high enough to pay for the transactions I was penalized for. Chase bank was asking me for close to $200. I had to fight with them over this issue and they only agreed to take away two of the overdraft fees – even though, in reality, I deposited an appropriate amount of money to pay for the things I purchased! I am glad that Congresswoman Maloney is making this issue a priority, and I hope it becomes the law of the land so this type of thing doesn’t happen to other consumers in the future,” said Maryanne DeLeo, an intern in Congresswoman Carolyn Maloney’s district office and a consumer who has received excessive overdraft fees in the past.

“For too long, some financial institutions have preyed on consumers through unreasonable, unfair and often unseen fees,” said Congresswoman Nita Lowey (NY-17). “I applaud my colleague Carolyn Maloney for her steady focus on protecting hard-working families and am proud to cosponsor this badly needed piece of legislation.”

“Consumers have a right to know how their account functions and transparency should be guaranteed at every step along the way. At the very least, consumers should have a complete picture of their banks’ policies on overdrafts,” said Congressman Eliot Engel (NY-16)

“For years, consumers have been victims of deceptive and unfair practices implemented by most financial institutions. Overdraft protection is supposed to help, not hurt, consumers who are often unaware of the terms and excessive fees. I am calling on Congress to pass the Overdraft Protection Act, which adds transparency and allows consumers to make better-informed decisions,” said Congresswoman Yvette D. Clarke (NY-9)

“Congresswoman Maloney’s bill is a common-sense piece of legislation designed to protect consumers, too many of whom are being hit with inexplicably high overdraft fees, at a time when many Americans have been forced to watch every nickel and penny they spend. I am proud to cosponsor this bill,” said Congressman Jerrold Nadler (NY-10).

“The National Association of Consumer Advocates applauds Rep. Carolyn Maloney’s longstanding commitment to address abusive overdraft practices. Overdraft fees cost consumers billions of dollars each year and studies show that overdraft fees hit lower-income consumers and communities of color especially hard. The Overdraft Protection Act provides simple measure that would better protect American families from harmful overdraft practices,” said Ellen Taverna, Legislative Director at the National Association of Consumer Advocates.

“We commend Congresswoman Maloney for introducing a bill to reform the terrible abuses inflicted by bank overdraft practices," said Chi Chi Wu, Staff Attorney at National Consumer Law Center. "Study after study - the most recent just issued this week by the CFPB - show that these practices make it hard for consumers to anticipate and avoid overdrafts, and cost consumers billions of dollars every year."

“The CFPB’s thorough and data-driven analysis of financial institutions’ overdraft practices raise important questions about how this product impacts a consumer’s ability to maintain a checking account and conduct transactions in a safe and sustainable manner,” said Tom Feltner, Director of Financial Services at the Consumer Federation of America.  “We urge the adoption of Congresswoman Carolyn Maloney’s Overdraft Protection Act, which would curtail frequent, high overdraft fees, eliminate the unfair ordering of transactions that make it difficult for consumer’s to avoid them.”

“The CFPB study backs up Consumer Action's position that the 2010 Overdraft Rule is insufficient to protect consumers from outrageously high overdraft fees, repeated fees and manipulation by banks of the order in which daily transactions are sorted. Overdraft fees lead consumers to waste valuable income and they have direct and harmful effects: involuntary account closures, alienating consumers from the banking system and perpetuating the existence of high-cost "fringe" banking alternatives such as check cashing outlets. We support a higher level of protections for banking consumers such as those offered in Rep. Carolyn Maloney's Overdraft Protection Act,” said Linda Sherry, Director of National Priorities at Consumer Action.

“Only a few short years after the big banks helped bring about a near global financial collapse, they’re at it again, deceptively gouging consumers by charging $35 to cover a $2.00 debit card purchase when the account is low on funds.  The latest report from the Consumer Financial Protection Bureau shows that banks are extracting billions of dollars in fees from consumers through these deceptive checking overdraft products.  Congresswoman Maloney’s common sense legislation would ensure that consumers get better, clearer information about overdraft protection and cap the amount they can be charged.  Congress can’t develop amnesia when it comes to how the banks pry money out of their customers,” said Megan Ahearn, Consumer Advocate for New York Public Interest Research Group.

“We strongly support Rep. Carolyn Maloney’s Overdraft Protection Act, which would improve disclosures to consumers for overdraft programs, and eliminate deceptive and abusive practices,” said Chuck Bell, Programs Director for Consumers Union, publisher of Consumer Reports magazine.  “Congress can help consumers save money by implementing fairer rules for overdraft programs that limit marketing tricks and bank fee-gouging. Overdraft fees have become a major revenue source for financial institutions, with banks earning more than $12.6 billion from this source in 2011 alone,” Bell said.  “Unfortunately, many ‘overdraft protection’ programs are really just a way for banks to bilk their most vulnerable customers with costly fees.  We believe that consumers should avoid opting in to these high-cost programs, and consider cheaper alternatives to avoid overdrafts.”

“Banks have long used overdraft protection programs to generate huge profits at the expense of their lower income customers -- the vast majority of overdraft fee income is collected from a small number of the banks’ customers who are struggling to make ends meet.  It is time for strong action to prevent abusive bank overdraft practices,” said Josh Zinner, Co-Director of Neighborhood Economic Development Advocacy Project.

"We commend Congresswoman Maloney for her championing this important consumer protection legislation,” said NYC Department of Consumer Affairs Commissioner Jonathan Mintz.  “As the recent CFPB study highlights, overdraft fees can often be the tipping point that push consumers out of the financial mainstream.  At a time when the City is working to help financially empower our residents by connecting them to safe, affordable banking opportunities, more must be done to ensure these efforts are not undermined by problematic overdraft practices."

Background
In March, Congresswoman Maloney introduced the Overdraft Protection Act once again. The bill would address a number of the issues outlined in the CFPB report.

The bill would:
•    Require overdraft fees to be reasonable and proportional
•    Limit overdraft to one per month and six per year
•    Codify the opt-in provisions that the Fed promulgated requiring that consumers opt-in to overdraft coverage
•    Prohibit institutions from manipulating the order of transactions to maximize overdraft fees
•    Add additional disclosures to consumers about overdraft coverage programs
Photo attached: (L. to R.) Chuck Bell, Programs Director, Consumers Union; Congresswoman Carolyn Maloney; Maryanne DeLeo, Astoria resident; Armando Chapelliquen, NYPIRG
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