Rep. Carolyn Maloney (D-N.Y.) is calling on federal regulators to protect consumers from excessive overdraft fees at banks.
Maloney wants the Consumer Financial Protection Bureau (CFPB) to limit the penalties that banks charge consumers who spend more than they have available in their checking accounts.
{mosads}In a letter to CFPB Director Richard Cordray, Maloney said the fees should be “reasonable and proportional” to the amount of the overdraft, and cited a recent study from the agency.
“The CFPB’s own report found that too many Americans are still being hit with excessive overdraft fees,” Maloney wrote.
“I am urging Director Cordray to limit overdraft fees and expand overdraft opt-in requirements in order to address the serious problems that the bureau’s report identified,” she added. “Too many Americans who are living paycheck to paycheck are being charged unfair and abusive fees.”
The CFPB’s report from July found that the average overdraft fee is $34, but most consumers who overdraft surpass their account balance by less than $24 and pay back the money within three days.
Calculated as interest rather than a penalty, the CFPB found that fee is equal to a 17,000 percent interest rate — something Maloney calls “excessive.”
Maloney said CFPB should limit the fees so they are proportionate to the amount by which a consumer overspends.
She also called for the CFPB to protect consumers from accidental overdrafts with written checks and automatic payments they set up online.
Consumers are only protected from overdrafts at ATMs, she noted.