Five of the nation’s major banking trade groups have sent a letter to Rohit Chopra, the Director of the Consumer Financial Protection Bureau, asking the Bureau to conduct a consumer study or focus groups before making any decisions on what to do about overdraft fees, arguing that the information published by the CFPB so far lacks “important facts” about how much the product is used and valued by consumers.
The letter was sent by the American Bankers Association, Consumer Bankers Association, Credit Union National Association, National Association of Federally Insured Credit Unions, and the National Bankers Association. The CFPB announced in December that it was cracking down on overdraft and non-sufficient funds (NSF) fees assessed by banks against consumers who spend more than they have in their bank accounts. The CFPB’s goal is to “restore meaningful competition” in the marketplace. Several banks announced they were eliminating or severely curtailing the fees they charged in response to the CFPB’s announcement.
Pointing out the options and flexibility that consumers now have to monitor their bank account balances and prevent overdraft or NSF fees from being assessed, the groups asked the CFPB to first determine consumers’ preferences and avoid making decisions “based on selective anecdotes or unsupported assumptions” about consumer behavior. Among the questions that the CFPB should seek to answer are:
- The features that these consumers seek when they open a deposit account;
- Why these consumers elect to opt-in to debit card overdraft protection;
- What they understand about their ability to opt-out and whether they have ever exercised that right;
- What occasions or needs typically prompt overdraft use;
- Whether overdraft protection has helped the consumer avoid a late or other penalty fee, meet another emergency need (such as avoiding a utility shut-off or eviction or responding to a medical emergency), or avoid the embarrassment, inconvenience, or other negative consequence caused by a declined transaction;
- Whether these consumers receive waivers of overdraft fees;
- Whether these consumers are aware of, and qualify for, available alternatives for covering overdraft transactions;
- Whether the consumer has prior experience using available alternatives for covering short-term liquidity needs;
- Reasons for choosing overdraft protection over available alternatives; and
- Options for meeting short-term liquidity needs if access to overdraft protection is restricted or cut-off entirely.
