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Published: December 2010

Office of the Comptroller: Update guidelines on banks, overdraft

Coalition: Overdraft

Consumer Action sent a letter with coalition partners to the Office of the Comptroller of the Currency asking the agency to address outstanding overdraft abuses and to update the standards it applies to banks.

Below is an excerpt from the letter:

As banks continue their campaigns to persuade consumers to agree to pay steep fees for debit card overdrafts, we urge the Office of Comptroller of the Currency to adopt stricter guidance that effectively requires banks to use fair overdraft practices and fully inform consumers. In the past several months, our organizations filed comments in dockets opened by the Office of Thrift Supervision (OTS) and the FDIC2 to update and strengthen their guidelines for overdraft programs. We urge the OCC to also revisit overdraft abuses that remain and to update the standards you apply to banks.

In late June, the Consumer Federation of America released a survey of the fifteen largest banks‘ overdraft fees, limits, and total costs per day of overdrafts (Attachment A). CFA documented that fees charged bear no relationship to the amount overdrawn, that bank limits on the number of fees charged per day fail to provide real protection against fee gouging, and that nine of the fifteen largest banks continue to charge two or more fees for a single overdraft. Most of the largest banks are soliciting their customers to pay for overdrawn debit card transactions that could easily be denied at no charge to their customers. Notably, however, one large bank—Citibank—has never charged overdraft fees on debit card transactions, and the largest issuer of debit cards, Bank of America, stopped those fees this summer.

We are monitoring overdraft opt-in messages and forms used by the largest banks as well as examples provided to us by our members. Several banks‘ claims and products are cause for concern, which we detail below. Across the board, failure by the Federal Reserve to regulate overdraft programs under the Truth In Lending Act and to provide cost information in tabular format means that consumers are being asked to make an uninformed decision to use banks‘ most expensive form of credit.

In this letter, we urge the Office of Comptroller of the Currency to update your guidance to banks on overdraft programs consistent with our recommendations to the OTS and the FDIC. We especially urge that you address transaction posting order immediately, particularly in light of recent judicial and regulatory actions. We also provide examples of troubling products and messages from opt-in marketing currently used by the largest national banks and request corrective action from the OCC.

Lead Organization

Center for Responsible Lending

Other Organizations

Center for Responsible Lending | Consumer Federation of America | Consumers Union | National Consumer Law Center | USPIRG

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