June 17, 2022

CFPB touts efforts to measure impact of FIs overdraft programs

cfpb The CFPB published a blog post Thursday regarding overdraft and non-sufficient fund (NSF) fees. The post describes the bureau’s supervisory efforts toward financial institutions “with a higher share of frequent over drafters or a higher average fee burden for overdrafts.”

Specifically, the post highlights the five consumer-impact metrics that the bureau has started asking financial institutions, including:

  • the total annual dollar amount consumers receive in overdraft coverage compared to the amount of fees charged;
  • the annual dollar amount of overdraft fees charged per active checking account;
  • the annual dollar amount of NSF fees charged per active checking account;
  • the prevalence of frequent overdrafters, or the share of active checking accounts with more than 6 and more than 12 overdraft and/or NSF fees per year; and
  • the share of active checking accounts that are opted into overdraft programs for ATM and one-time debit transactions.

The bureau also included a more detailed set of questions on overdraft practices. They intend to use the information gathered from these questions to identify institutions for further examination and review. Of note, the bureau also praised the banks and credit unions that have changed their overdraft and NSF programs to be less reliant on fees.

Of note, NAFCU has previously written to Congress to express concerns about legislative efforts to limit overdraft fees, cautioning that legislative efforts to eliminate overdraft protection programs will likely result in significant negative impacts on borrowers and credit unions. Next Wednesday the House Financial Services Committee will hold a rescheduled markup of the Overdraft Protection Act, which was delayed this week when Committee Chairwoman Maxine Waters, D-Calif., tested positive for Covid. NAFCU has expressed concerns about the legislation and the impact it would have on credit union programs. In addition, the association has discussed overdraft fees in both a letter and joint trades letter submitting feedback to the CFPB on their request for information (RFI) regarding fees on consumer financial products and services, or "junk fees."

NAFCU will continue to monitor the CFPB’s actions on overdraft programs.