By now, you have probably heard about the new Consumer Financial Protection Bureau (CFPB), a federal agency designed to ensure that financial products and services for consumers are beneficial for consumers. Previously, the CFPB accepted complaints about credit cards and mortgages. Consumers can now submit complaints about checking and savings accounts to the CFPB. The website has a different form for consumers to share their stories about experiences with financial products.
Also, the CFPB is investigating how checking account overdraft programs affect consumers. Part of this investigation the CFPB seeks feedback from the public about a proposed “penalty fee box” disclosure on a consumers’ checking account statements to clarify the amount overdrawn and total overdraft fees charged.
Reportedly, the average overdraft fee ranged from $30 to $35 in 2011. A 2008 study (Adobe PDF) by the Federal Deposit Insurance Corporation (FDIC) found several alarming trends and statistics about overdraft programs.The CFPB has four concerns about overdraft fees:
- Transaction Re-ordering that Increases Consumer Costs: the way that overdraft fees are applied by some banks increase costs to consumers. One practice is the co-mingling of all checks, bill payments, debit card transactions, and ATM withdrawals each day and processing the largest transactions first -- rather than in the order received. This maximizes the number of transactions that will trigger overdraft fees.
- Missing or Confusing Information: the CFPB is analyzing how consumers anticipate and avoid overdraft fees given current banking disclosures -- and if there is a better way.
- Misleading Marketing Materials: the CFPB is investigating reports that consumers have received misleading marketing materials about overdraft fees, since opt-in rates to overdraft programs vary widely by bank.
- Disproportionate Impact on Low-Income and Young Consumers: The CFPB is concerned that overdraft programs disproportionately affect certain groups. The same 2008 FDIC study found several alarming statistics, including that 9 percent of checking account customers pay about 84 percent of overdraft fees.
You can view a prototype of this "penalty fee box" at the CFPB website (Adobe PDF). To submit feedback about overdraft fees, include the Docket No. CFPB-2012-0007 with your submission by:
- Online instructions: www.regulations.gov,
- Email: firstname.lastname@example.org
- Postal Mail: send letters to Monica Jackson, Office of the Executive Secretary, Bureau of Consumer Financial Protection Bureau, 1500 Pennsylvania Ave, NW, (Attn: 1801 L Street, NW), Washington, DC 20220.
The CFPB began operation on July 21, 2011. In its annual report (Adobe PDF) to the U.S. Congress, the CFPB reported that by December 31, 2011, it had received 13,210 complaints from consumers, including 9,307 credit card complaints and 2,326 mortgage complaints. 44% of all complaints were submitted through the CFPB website, and about 15% via telephone calls.