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Credit union and banking trade groups sent a joint letter to CFPB Director Rohit Chopra on Thursday to ask for additional data collection, development and analysis before making new overdraft policy recommendations.
Last month, the CFPB issued two reports concerning the amount of overdraft and non-sufficient fees (NSF) collected by banks and credit unions. CUNA, NAFCU, the American Bankers Association, the Consumer Bankers Association and the National Bankers Association jointly stated that the reports lacked analysis, needed input from the public and asked the bureau to conduct a study of consumer preferences regarding overdraft issues to gain a better understanding of the fees before the CFPB decides on new policy guidelines.
"We recommend that the Bureau focus on frequent users of overdraft, which constitute approximately 9% of all overdraft users, according to a 2017 Bureau report in order to develop data on regular users, the people that will be most affected by any changes to the regulatory treatment of overdraft," the letter stated.
The letter continued, "Restrictions on overdraft may lead financial institutions to stop offering these services to their customers, which would result in significantly more returned checks and declined transactions. This may lead to unnecessary credit rating harm; returned item fees charged by the institution or by the merchant; fees from landlords and others; or requirements to pay using alternative methods such as money order."
The groups included another ask of the CFPB to offer clear and easy-to-understand overdraft policies. "The Bureau's activities related to overdraft should not be a 'gotcha' exercise through enforcement. Instead, any changes to supervisory expectations or guidance applicable to overdraft should be made transparently and should be based on current and complete data. It is critical that any changes not push consumers outside of the mainstream banking system to meet their financial needs."
Included in the letter were a number of additional items the organizations asked the CFPB to investigate concerning the creation of an overdraft policy recommendation. Those items included:
- Features that consumers seek when they open a deposit account;
- Why consumers elect to opt-in to debit card overdraft protection;
- What consumers understand about their ability to opt-out and whether they have ever exercised that right; and
- What occasions or needs typically prompt overdraft use.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
