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Measuring the impact of financial institution overdraft programs on consumers

In December 2021, the CFPB released two research reports on checking account overdraft fees, detailing how banks continue to rely on these fees as a major source of revenue and how they do not compete on transparent, upfront pricing. At that time, CFPB Director Rohit Chopra announced that financial institutions with a higher share of frequent overdrafters or a higher average fee burden for overdrafts should expect the Bureau to be paying them close supervisory attention. These often exploitative and hidden fees can have a significant impact on a family’s bank account, and as a result, we have been closely monitoring those institutions.

Since the beginning of the year, we have been piloting a supervision effort to collect key metrics from some supervised institutions regarding the consumer impact of their overdraft and non-sufficient fund (NSF) practices. We have asked over 20 institutions for data on five consumer-impact metrics:

  1. Total annual dollar amount consumers receive in overdraft coverage compared to the amount of fees charged.
  2. Annual dollar amount of overdraft fees charged per active checking account.
  3. Annual dollar amount of NSF fees charged per active checking account.
  4. 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.
  5. Share of active checking accounts that are opted into overdraft programs for ATM and one-time debit transactions

In addition to these metrics, our Supervision team is seeking detailed information about entities’ overdraft practices, including how they assess their fees, their grace periods, the dollar thresholds above which fees are assessed, and caps on the number of fees charged per day, or per statement period. View the complete set of questions on overdraft practices.

We intend to use this information to identify institutions for further examination and review. We also plan to provide feedback to each institution, as well as to share this information with other regulators. This supervisory information will not be made public but is intended to support our ongoing work.

We’re encouraged that some banks and credit unions are competing for consumers’ business by changing their overdraft and NSF programs. We will evaluate how these changes are implemented. Many banks have yet to improve their practices. Our hope is that by the Bureau collecting and sharing these metrics, 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.

If you have a problem with a consumer financial product or service, you can submit a complaint to the CFPB online or by calling (855) 411-2372. You can also try reaching out to the company. Companies can usually answer questions unique to your situation and more specific to the products and services they offer.

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