Maloney Criticizes Banks’ Predatory Overdraft Practices, Announces Plans to Reintroduce Overdraft Protection Act
WASHINGTON, DC — At today’s Financial Services Committee virtual hearing titled “Holding Megabanks Accountable: An Update on Banking Practices, Programs and Policies,” Congresswoman Carolyn B. Maloney (D-NY), senior member of the committee, announced her intention to reintroduce the Overdraft Protection Act. This bill will crack down on unfair overdraft fees, and would establish fair and transparent practices for overdraft coverage programs. Rep. Maloney has introduced a version of this legislation since 2009.
During the hearing, Congresswoman Maloney stated, “President Obama signed into law my Credit CARD Act – a bill I wrote to end the most abusive practices of the credit card industry. According to one study, this bill alone is estimated to have saved consumers nearly $12 billion dollars a year. A 2015 CFPB study estimated that it saved consumers $16 billion dollars in the first years of its enactment. But where we made great progress on stopping abusive practices in the credit card market, there is still much work to do on banks’ overdraft practices.
“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 dollars in overdraft fees ALONE and reported over $147 billion dollars in net income in 2020.
“Making these practices even more egregious, overdraft fees hit those who can afford them the least, the hardest. Those who are trapped are often cash-strapped hardworking Americans and college students who are struggling to pay their bills. And so that $8.8 billion dollars collected last year is money taken out of the hands of Americans who were just trying to keep food on the table and stay afloat in the middle of a pandemic.
“Each bank has slightly different policies, making this even more confusing to consumers. All your banks basically charge around $35 dollars for EACH overdraft, but the worst of these fees can be on debit card transactions, where the overdraft averages $20 dollars, but comes with a $35 fee. Multiple transactions can quickly add up to where a consumer is charged well over $100 dollars in fees alone.”
You can watch her full statement here.