Brandi Reynolds, CAMS-Audit, CCAS的动态

The Consumer Financial Protection Bureau (CFPB) recently took action targeting an "overdraft loophole" that exempted overdraft loans from lending laws. ? The final rule provides these institutions with three options for charging overdraft fees: Cap their overdraft fee at $5, which is the estimated level at which most banks can cover the costs associated with administering a courtesy overdraft program; Cap their fee at an amount that covers costs and losses, allowing banks to offer overdraft as a convenient service rather than as a profit center; Disclose the terms of their overdraft loan just like other loans, requiring compliance with standard requirements governing other loans, such as credit cards. This includes giving consumers a choice on whether to open the line of overdraft credit, providing account-opening disclosures for comparison shopping, sending periodic statements, and giving consumers a choice of whether to pay automatically or manually. This change is part of the CFPB's increasing regulatory pressure against junk fees and will require financial institutions to immediately evaluate their overdraft programs as they navigate the complexities of the new rule and assess compliance. ? You can read the full article here:

The latest news from the Bureau on overdraft fees. Here's the highlight of the rule: These institutions would have to choose one of the following options when charging for overdrafts: Cap their overdraft fee at $5:?Under this simple option, covered banks and credit unions could simply cap their fee at $5, which is the estimated level at which most banks could be able to cover their costs associated with administering a courtesy overdraft program. Cap their fee at an amount that covers costs and losses:?For banks that wish to offer overdraft as a convenient service rather than as a profit center, the final rule allows financial institutions to set their fee at an amount that covers their costs and losses. Disclose the terms of their overdraft loan just like other loans:?For financial institutions that wish to profit from overdraft lending, they may do so by complying with the standard requirements governing other loans, like credit cards. This would include giving consumers a choice on whether to open the line of overdraft credit, providing account-opening disclosures that would allow comparison shopping, sending periodic statements, and giving consumers a choice of whether to pay automatically or manually.

Wow! "The CFPB’s Final Overdraft Rule: The final rule makes several key updates to federal regulation governing overdraft fees for financial institutions with more than $10 billion in assets. These institutions would have to choose one of the following options when charging for overdrafts: ?? Cap their overdraft fee at $5:?Under this simple option, covered banks and credit unions could simply cap their fee at $5, which is the estimated level at which most banks could be able to cover their costs associated with administering a courtesy overdraft program. ?? Cap their fee at an amount that covers costs and losses:?For banks that wish to offer overdraft as a convenient service rather than as a profit center, the final rule allows financial institutions to set their fee at an amount that covers their costs and losses. ?? Disclose the terms of their overdraft loan just like other loans:?For financial institutions that wish to profit from overdraft lending, they may do so by complying with the standard requirements governing other loans, like credit cards. This would include giving consumers a choice on whether to open the line of overdraft credit, providing account-opening disclosures that would allow comparison shopping, sending periodic statements, and giving consumers a choice of whether to pay automatically or manually."

CFPB Closes Overdraft Loophole, Delivering Relief To Millions Of Consumers December 13, 2024 — by Stacy Brown Media The Consumer Financial Protection Bureau (CFPB) on Thursday took action to close a long-standing overdraft loophole that allowed banks to bypass lending laws. The CFPB’s final rule targets banks and credit unions with over $10 billion in assets, which dominate the U.S. financial market. Biden administration officials said the move should provide significant relief for consumers burdened by excessive overdraft fees. The new regulation, expected to save consumers up to $5 billion annually, will provide households that incur overdraft fees an average of $225 in yearly savings. “For far too long, the largest banks have exploited a legal loophole that has drained billions of dollars from Americans’ deposit accounts,” CFPB Director Rohit Chopra said. “The CFPB is cracking down on these excessive junk fees and requiring big banks to come clean about the interest rate they’re charging on overdraft loans.” Leaders such as Rep. Valerie Foushee (D-N.C.) noted how instrumental such a move will be for people of color. “I joined efforts in urging the CFPB to close this loophole that disproportionately impacts Black [and] Latino families, [and] I’m pleased to see action taken against predatory practices.” The loophole originated from a 1969 Federal Reserve Board exemption under the Truth in Lending Act (TILA). At the time, overdraft fees were considered a courtesy rather than a source of profit, accommodating delays caused by mailing checks. However, overdraft loans have since evolved into highly profitable products, contributing to billions in consumer costs and causing millions to lose access to banking services due to adverse credit reports. Under the final rule, financial institutions must select one of three options when managing their overdraft programs: 1. Capping the fee at $5 2. Charging a fee that covers only costs and losses 3. Treating overdrafts as loans subject to lending laws The final rule, which goes into effect on October 1, 2025, is part of the CFPB’s broader initiative to eliminate “junk fees” — hidden or excessive charges that harm consumers. For more details and to continue this article, click here ?? https://lnkd.in/eiJMYZm6 Source: The Washington Informer #CFBP #JunkFees #OverdraftFees #TILA #BidenAdministration

In the final weeks of the Biden administration, the U.S. Consumer Financial Protection Bureau issued a new rule capping the overdraft fees charged by large banks to $5, or the administrative costs of covering an overdraft payment. The CFPB said Tuesday that the new policy was meant to curb “excessive” overdraft fees, which the agency estimated to stand at roughly $35 per overdraft transaction and to collectively cost the public billions a year. “For far too long, the largest banks have exploited a legal loophole that has drained billions of dollars from Americans’ deposit accounts,” CFPB Director Rohit Chopra said. “The CFPB is cracking down on these excessive junk fees and requiring big banks to come clean about the interest rate they’re charging on overdraft loans.” The rule is expected to save individual households as much as $225 a year, the CFPB said. Applicable to financial institutions with at least $10 billion in assets, such as JPMorgan Chase and Bank of America, the final rule will apply the Truth in Lending Act’s credit disclosure requirements to certain overdraft charges. The Truth in Lending Act requires lenders to clearly disclose their interest rates and their credit terms, except for instances when banks honor checks that hadn’t cleared and charge the consumer an overdraft fee. That exemption, the CFPB said, was created in 1969, when consumers would send and receive checks by mail, and banks would only “infrequent[ly]” extend overdraft credit to prevent checks from bouncing. The CFPB explained its rule would narrow that exemption to overdraft credit that banks provide at or below the costs of extending the credit, or $5, the agency’s approximate estimate of the costs of providing overdraft credit. Outside of those exceptions, banks must disclose the terms of any overdraft loans they provide consumers to cover transactions that exceed available balances, according to the regulation. Full story: https://lnkd.in/eBAXn9CC

The new rules for large bank overdraft fees adopted by the Consumer Financial Protection Bureau (CFPB) seems to be an overreach yet again! New Rule Adoption: The CFPB has adopted a final rule to close an outdated overdraft loophole, affecting banks and credit unions with more than $10 billion in assets. It has an estimated consumer savings of 5 billion annually in overdraft fees, averaging $225 per household. The 3 options for large banks appear to be: A: Cap the overdraft fee at $5. B: Cap the fee at an amount that covers costs and losses. C: Disclose the terms of overdraft loans like other loans. So far the American Bankers Association (ABA) has expressed disappointment, arguing the rule could harm consumers and exceed the CFPB’s legal authority. Implementation Date: The rule will go into effect on October 1, 2025. Do you think this will get enacted and duly enforced?

The Consumer Financial Protection Bureau (CFPB) is set to release a final rule capping overdraft fees at $5 for the largest banks and credit unions with assets over $10 billion. The rule, which will affect approximately 175 financial institutions, reclassifies overdraft fees as loans subject to Truth in Lending Act disclosures. Under the new regulation, banks have three compliance options: cap fees at $5, limit fees to cover costs and losses, or charge higher fees with full loan disclosure requirements. The CFPB's action aims to reduce excessive overdraft charges, which Director Rohit Chopra criticizes as "junk fees" that were never intended to be major profit drivers for banks. While the bureau estimates this rule could save consumers $5 billion annually, it faces potential legal challenges from bank trade groups and possible Congressional repeal. The rule is scheduled to take effect on October 1, 2025, marking a significant shift in overdraft fee practices for large financial institutions. A couple of quick questions: What adaptation strategies can banks and credit unions offer to help compensate for the loss in overdraft fee revenue? (This is especially relevant as some financial institutions rely more heavily on non-interest income than others.) Could those methods for compensating for the loss of overdraft fees have other drawbacks? How much of this will be implemented or changed under the new administration? As always, I would love to hear your thoughts. #banking #bankingindustry #creditunions #cfpb #overdraft

The latest action by the CFPB addressing fees within consumer lending. If you aren't taking a look at your fee structure and your borrower agreements by now, you need to start. It feels like we are seeing at least one fee related enforcement action against one or more lenders on a monthly basis.

This is great news, if I am understanding correctly. There are a great deal of common working class folks, maybe even single parents with low income, as I once was, that can't get ahead because of astronomical fees such as the overdraft fee. The overdraft could be, no fault of your own, due to someone charging your account that shouldn't have. By the time you realize your account is overdrawn, even by $1 or less, you have been charged 3+ charges. For someone with low income, this could be detrimental and very difficult to recover from. I wonder if this will also apply to the fees they charge customers for garnishment processing? Currently, when we send a garnishment to the bank, even if they decline to pay the garnishment for insufficient funds etc, they still charge the customer $125-$150 fee. If they did not pay us for the garnishment, the most work they did was 1. review the bank account for funds 2. Reply by fax, email, or letter to us stating the reason they are not paying us. That is it! 10 minutes of work should not be charged a $125-$150 fee. My thoughts are you only charge if you actually do the work of processing the garnishment, and it is no more work than processing an overdraft so charge the same fee.

There is a saying, "People are slow learners but fast forgetters." The longtime alternative to offering ODP to bank customers is simply to bounce checks and collect NSF fees. The downstream harm to bank customers can be enormous, including possible criminal prosecution for issuing bad checks. Moreover, the CFPB has no authority whatsoever to impose price controls, particularly under the risible assertion that consumers will "save" money. Watch while depositories raise minimum deposit requirements, charge more for basic account services, and make checking accounts less accessible to LMI customers.