According to Rep. Carolyn Maloney (D-N.Y.) and 46 co-sponsoring House Democrats, the Federal Reserve's opt-in rule for courtesy pay didn't go far enough.
Maloney on Thursday introduced the “Overdraft Protection Act”, which would expand opt-in requirements beyond debit card transactions to include paper checks, ATM withdrawals and recurring ACH payments.
The bill would also require disclosure of coverage and fees, both at the time of original opt-in, and again when an overdraft fee is charged, require that overdraft fees be “reasonable and proportional” to the cost of the transaction, cap fees to one per month and six per year, and ban the ordering of transactions to maximize overdrafts.
The bill would also define overdraft fees as finance charges subject to the Truth in Lending Act disclosures, and require the Consumer Finance Protection Bureau to study prepaid debit card overdraft fees and grant rulemaking authority over those fees to CFPB.
“I can't imagine too many institutions continuing to provide this service if a bill along these lines would actually pass,” NAFCU Director of Regulatory Compliance Steve Van Beek wrote in the trade's compliance blog on Thursday.
Van Beek compared the bill to the Credit CARD Act, which was passed by Congress even though the Federal Reserve was revising credit card disclosures and rules. Maloney's bill comes as the CFPB is researching overdraft protection programs, with a comment period that was recently extended to June 29.
Co-sponsors, all Democrats, include: Barney Frank (D-Mass.), Michael Capuano (D-Mass.), Keith Ellison (D-Minn.), Luis Gutierrez (D-Ill.), James P. Moran (D-Va.), Jesse Jackson Jr. (D-Ill.), Laura Richardson (D-Calif.), Chris Van Hollen (D-Md.), Jose Serrano (D-N.Y.), David Cicilline (D-R.I.), John Dingell (D-Mich.), Brad Miller (D-N.C.), Charles Rangel (D-N.Y.), Judy Chu (D-Calif.), Jan Schakowsky (D-Ill.), Raul Grijalva (D-Ariz.), Earl Blumenauer (D-Ore.), Andre Carson (D-Ind.), Janice Hahn (D-Calif.), Marcy Kaptur (D-Ohio), Jerrold Nadler (D-N.Y.), John Conyers (D-Mich.), Bennie Thompson (D-Miss.), Corrine Brown (D-Fla.), Elijah Cummings (D-Md.), Anna Eshoo (D-Calif.), Charles Gonzalez (D-Texas), Eleanor Holmes Norton (D-D.C.), Barbara Lee (D-Calif.), Rosa DeLauro (D-Conn.), Frederica Wilson (D-Fla.), Loretta Sanchez (D-Calif.), Lynn Woolsey (D-Calif.), Nita Lowey (D-N.Y.), Ed Towns (D-N.Y.), Maxine Waters (D-Calif.), Paul Tonko (D-N.Y.), Bobby Rush (D-Ill.), Gary Ackerman (D-N.Y.), Maurice Hinchey (D-N.Y.), Pete Stark (D-Calif.), Rush Holt (D-N.J.), Frank Pallone (D-N.J.), Niki Tsongas (D-Mass.), Xavier Becerra (D-Calif.), and Karen Bass (D-Calif.).
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