It’s really no secret that overdraft programs and practices have been areas of focus for all the regulatory agencies for quite some time now.
On June 16th, the CFPB announced in its blog that, since the beginning of the year, it’s been working on a …supervision effort to collect key metrics from some supervised institutions regarding the consumer impact of their overdraft and non-sufficient fund (NSF) practices. The CFPB has asked more than 20 institutions for the following “consumer-impact metrics”:
- Total annual dollar amount consumers receive in overdraft coverage compared to the amount of fees charged.
- Annual dollar amount of overdraft fees charged per active checking account.
- Annual dollar amount of NSF fees charged per active checking account.
- Prevalence of frequent overdrafters: the share of active checking accounts with more than 6 and more than 12 overdraft and/or NSF fees per year.
- Share of active checking accounts that are opted into overdraft programs for ATM and one-time debit transactions
In addition, the CFPB is asking for details from these institutions on their practices, such as how fees are assessed, if there are any grace periods, dollar thresholds, and/or limits on the number of fees charged. A list of the exact questions can be found here.
It’s important to note that the CFPB’s stated intent in gathering this information is to identify institutions that warrant further exam and review/supervisory work, based on the share of frequent overdrafters or a “higher average fee burden”. While the information the CFPB collects will not be made public, it will be shared with other regulators. Each institution will receive feedback from the CFPB as well.
The blog acknowledged that some institutions have changed their overdraft and NSF programs and that the CFPB will look to evaluate how such changes are implemented. Ultimately, the CFPB hopes that …institutions can better understand the impact of their overdraft practices on their consumers relative to their peers, and that this knowledge further boosts competition and improves outcomes for American families.
Ready to learn more about overdrafts? Curious about the current expectations and best practices? Join us for “What You Need to Know About Overdrafts”!
Published
2022/06/27
