Maloney Joins with Consumer Advocates to Introduce Overdraft Protection Act of 2019

WASHINGTON, DC – Congresswoman Carolyn B. Maloney (D-NY), senior member of the House Financial Services Committee and author of the Credit CARD Act, today joined with consumer protection advocates to announce the introduction of the Overdraft Protection Act of 2019, which will crack down on unfair overdraft fees, and would establish fair and transparent practices for overdraft coverage programs.

Overdraft fees currently cost consumers an egregious $15 billion per year, according to the Consumer Financial Protection Bureau. This bill will slash this drastically. Rep. Maloney has been introducing a version of this legislation since 2009. This bill builds on the progress made under the Credit CARD Act of 2009 which saves consumers roughly $12 billion per year.

“Unfair, deceptive, and costly overdraft fees hit those who can afford them the least the hardest; cash-strapped hardworking Americans and college students who are struggling to pay their bills,” said Rep. Maloney. “Even one overdraft penalty can quickly trigger hundreds of dollars in fees and drive customers into a financial hole. These fees take advantage of people who are new to the financial system, have limited financial literacy, or are in a situation that an overdraft is the only option. We need to change the status quo and put the $15 billion consumers are spending on overdraft fees back where it belongs – in Americans’ pockets. No cup of coffee or Netflix subscription should cost $36.”

“It’s time for our country to move past ‘gotcha’ banking fees. Consumers deserve reasonable reform of overdraft fees and this proposal is a step in the right direction,” stated Chris Peterson, Director of Financial Services and Senior Fellow at Consumer Federation of America.

The Overdraft Protection Act of 2019 would add significant consumer protections and useful new disclosures to the Federal Reserve’s 2010 Overdraft Rules,” said Linda Sherry, director of national priorities for Consumer Action. “Codifying the existing rules and requiring a raft of new guardrails gives checking account customers new opportunities to select an overdraft program that works for them. If they do choose their bank’s 'courtesy' overdraft option—not what we recommend!—they will be better protected from serial overdrafts, automatic ATM overdrafts and predatory overdraft fees. What we like best is the requirement that these consumers be specifically informed about any alternative savings- and credit-based overdraft services that might save them money when their account has insufficient funds.

"We thank Congresswoman Maloney for introducing a bill to reform the terrible abuses inflicted by bank overdraft practices," said Chi Chi Wu, National Consumer Law Center staff attorney. “Not only do overdraft fees drain precious dollars from financially strapped households creating financial instability, they can end up shutting consumers out of the banking system altogether when accounts are closed and reported to databases that banks use to screen new customers." 

"Consumer Reports is proud to support the Overdraft Protection Act, which will set essential restrictions on when and how banks charge fees to consumers who overdraft their accounts,” said Anna Laitin, Director of Financial Policy, Consumer Reports. “These overdraft fees are insidious and it is long past time for Congress to take action to limit them."

“Banks’ use of predatory overdraft practices represents a broken checking account market,” said Vincenza Previte, Communications Manager, Center for Responsible Lending. Because these fees are hidden, banks aren’t competing on price, but rather using shady practices to generate revenues.”

"The Overdraft Protection Act takes steps to rein in deceptive marketing of opt-in overdraft protection products and limits the number of overdrafts that can be charged per month and per year. It’s an important bill that will protect college students, young people, and other people of limited means from becoming cash cows for overdraft revenue," said Kaitlyn Vitez, Higher Ed Campaign Director, U.S. PIRG.

“One overdraft fee can throw a family into financial disarray, and as they add up, they can snowball into a financial crisis. They hit working people living paycheck to paycheck and communities of color especially hard, stripping hard-earned dollars away from those who can least afford to lose them,” said Rob Randhava, Senior Policy Counsel, The Leadership Conference on Civil and Human Rights. “We want to get more people into the mainstream banking system, but we need fair, transparent rules in order to keep them there.”

In addition to those who joined the congresswoman at today’s introduction event, 34 organizations, led by Americans for Financial Reform (AFR) have endorsed the legislation and have asked all Members of Congress to support the bill. You can read the letter here.

Endorsing organizations include:

1. Americans for Financial Reform
2. 20/20 Vision
3. Alaska Public Interest Research Group (AkPIRG)
4. Center for Responsible Lending
5. Communications Workers of America (CWA)
6. Consumer Federation of America
7. Consumers for Auto Reliability and Safety
8. Georgia Watch
9. Gray Panther
10. International Union, UAW
11. Kentucky Resources Council, Inc.
12. Madison-area Urban Ministry
13. Maggie Cervantes
14. Miami Valley Fair Housing Center, Inc.
15. Michigan League for Public Policy
16. NAACP
17. National Consumer Law Center (on behalf of its low-income clients)
18. New Home Development
19. Partners In Community Building, Inc.
20. PathWays PA
21. Pennsylvania Council of Churches
22. Public Justice Center
23. Reinvestment Partners
24. Renaissance Entrepreneurship Center
25. Tennessee Citizen Action
26. The Collaborative
27. The Leadership Conference on Civil and Human Rights
28. THE ONE LESS FOUNDATION
29. U.S. PIRG
30. United Way of Southern Cameron County
31. VOICE - OKC
32. West Virginia Center on Budget and Policy
33. Woodstock Institute
34. WV Citizen Action Group

The 2007 documentary Overdrawn! details these terrible practices. You can watch the documentary here.

Bill text can be found here.

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