Bill Introduced to Limit Overdraft Fees
A bill was introduced in the House of Representatives on Tuesday which would put further limitations on overdraft fees on checking accounts.
Democrat Carolyn Maloney introduced the “Overdraft Protection Act” bill that would require overdraft fees be “reasonable and proportional” to the amount of the overdraft, and also limit banks from charging more than one overdraft fee per month or more than six each year.
The bill would require a consumer’s affirmative opt-in to overdraft plans with clear disclosure of coverage and fees. In addition, the bill would not allow banks to post checking account transactions in a high-to-low order which enables the institution to maximize overdraft fees.
The bill has 42 cosponsors, all Democrats.
“The Federal Reserve opt-in rule for debit card overdrafts has been in effect since August, 2010. But it is quite clear more needs to be done in the area of consumer disclosures and to help consumers avoid multiple overdrafts,” Maloney said in a statement. “That’s why my bill expands the opt-in requirement to paper checks, ATMs, and recurring monthly payments–and also increases disclosure to consumers when an overdraft occurs, limits the fees’ price and frequency, and bans the manipulation of transactions.”