The CFPB is casting a critical eye on overdraft fees charged by banks — despite facing an uncertain future in the Trump administration.
The Dodd-Frank-enabled consumer protection group has long been making noises about limiting the fees banks can charge consumers for overdrawing their accounts — and now it seems it will drop a new set of governing rules later this year.
Consumer advocates have long noted that overdraft fees have quietly become a surging source of income for banks. Some observers said that revenue from overdraft fees now outpaces that from pawn shops, payday lenders and tax-refund anticipation checks put together. These advocates argued that banks have essentially found new ways to make consumers foot the bill in the face of profit-dropping low interest rates.
“[Overdrafts] allow customers to spend money they don’t have — then punish them for it,” noted Josh Reich, cofounder and CEO of Simple, an online bank based in Portland, Ore. The seven-year-old bank has never allowed account balances to go below zero and never will.
“Big banks are preying on people when they need financial help the most,” he claimed.
And some big banks have made some pretty big bucks on overdrafts.