Banks Make Billions Breaking the Law on Overdraft Fees

A 2010 law was supposed to relieve Americans of the onerous penalties, but thanks to aggressive marketing campaigns that persuade consumers to “opt in” for overdraft coverage, banks made nearly $14 billion on the “service” last year.

Source: In Spite of 2010 Law, Banks Still Make Billions on Overdraft Fees

In 2010, Congress passed a law requiring customers to “opt in” for overdraft “services.” Otherwise, the banks would deny purchases attempted with accounts with insufficient funds.

A new report from the Center for Responsible Lending (CRL) claims abusive overdraft practices in the banking industry are alive and well. It finds that consumers paid nearly $14 billion in overdraft fees last year.

CRL’s analysis confirms that overdraft abuses continue, carrying an enormous annual price tag for consumers as a whole, and with devastating effects on individuals,” Peter Smith, a Senior Researcher at CRL and the report’s co-author, said in an email to ConsumerAffairs.

After the new law went into effect, posing a threat to banks’ lucrative fee revenue, most banks launched aggressive marketing campaigns to persuade consumers to “opt-in” for overdraft coverage. Many have done so, even though it probably costs them money.

The report claims that some consumers who have not opted in are getting hit with overdraft fees as well. A year ago, the Consumer Financial Protection Bureau (CFPB) fined Regions Bank $7.5 million, saying it levied overdraft fees on thousands of consumers who had not opted-in for overdraft coverage.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s