Released: October 15, 2009

Banks need customer ok to pay overdrafts

Source: Kathy Chu, USA Today

The Federal Reserve said it plans to release a rule in the next month that requires banks to get consumers’ permission to charge a fee for paying certain transactions that overdraw their account.

At a hearing before the Senate Banking Committee Wednesday, Federal Reserve Governor Daniel Tarullo said that the new regulation would allow a consumer “to know that he or she was opting into a program like this.”

The Fed’s move comes amid congressional outcry about high overdraft and bank fees that are pushing consumers deeper into debt. The agency released a preliminary rule on debit card and ATM overdrafts late last year, but didn’t say then whether it would require banks to get consumers’ consent to sign them up for these programs.

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