H.R. 1456 would extend the protections of the Truth in Lending Act to overdraft protection programs and services provided by depository institutions, to require customer consent before a depository institution may initiate overdraft protection services and fees, to enhance the information made available to consumers relating to overdraft protection services and fees, to prohibit systematic manipulation in the posting of checks and other debits to a depository account for the purpose of generating overdraft protection fees.
Detailed Summary
Consumer Overdraft Protection Fair Practices Act - Amends the Truth in Lending Act to set forth restrictions upon overdraft protection fees or services placed upon a consumer account in order to cover any debit due to insufficient funds in such account.
Prohibits certain misrepresentations made by an institution that it will extend credit to cover all overdrafts.
Prohibits specified advertising claims regarding overdraft protection programs or services, including any representation or statement encouraging use of the account as a service to: (1) meet short-term credit needs; or (2) obtain advances on a consumer's next payment of salary, wages, benefits, or other income.
Authorizes the Board of Governors of the Federal Reserve System to restrict additional acts or practices the Board deems unfair or deceptive in connection with the offering, operation, and advertising of overdraft protection programs and services.
Amends the Electronic Fund Transfer Act to set forth restrictions governing overdraft protection services and fees concerning payment of an electronic fund transfer initiated by the consumer at an automated teller machine (ATM) despite of a lack of sufficient funds in the consumer's account.
Amends the Expedited Funds Availability Act to prohibit a depository institution from: (1) imposing overdraft protection fees for paying any check drawn on the account in spite of a lack of sufficient funds unless the account holder has affirmatively requested such service; or (2) engaging in a pattern or practice of delaying the posting of any deposit in an account, or manipulating the process of posting any check or other debit against an account, if such pattern or practice results in an overdraft that triggers payment of an overdraft protection fee.
Status of the Legislation
Latest Major Action: 3/19/2009: House committee/subcommittee actions. Status: Subcommittee Hearings Held.
Points in Favor
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Points Against
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Visitor Comments
URResponsible
March 16, 2009, 10:17am (report abuse)H.R. 1456 is a prime example of what is very wrong with our country today. Citizens are not being responsible for their own actions. As a veteran banker of 32 years, I am appalled at even the thought of such legislation. What's next, not allowing the banks to charge interest on loans if the borrower opts out of repaying the loan. This bill is very "BAD LAW". Banks are already required by law, TISA and regulation, Reg. DD to provide account information at the time of opening of an account and upon request prior to opening an account with the bank. The customer is told well in advance of ALL fees applicable to the particular account, including OVERDRAFT FEES. The customer is ultimately responsible for his own actions. Don't overspend and you'll never pay an overdraft fee, ever.
Adam
May 1, 2009, 6:52am (report abuse)As an individual who's been on the other end of this 50 billion dollar a year scam, being able to at least opt-out of this practice and have the transaction denied would greatly improve the likelihood of my rejoining the world of banking. They're not getting my money otherwise.
The classic argument of responsibility and waxing nostalgia about frugality of some bygone yesteryear is augmented by practices such as processing debits before credits, processing large fees before small payments to maximize the overdrafts...
I'm not some lazy hippie who can't balance a checkbook, I'm on what is presently a tight budget who has a lot of automatic micropayments at random times in the month.
Until legislation is passed, I work in cash and pre-paid debit cards only.
URResponsible gives the classic logical fallacy argument that there is some slippery slope: if we do x, then it's only a matter of time before y, where y is always some ridiculous extreme that no one is suggesting.
IAMNOTResponsible
May 6, 2009, 7:15pm (report abuse)The problem with these fees is it is not regulated. This practice is targeted at low balances hence, low incomes, resulting in banks taking money from the under privileged and less-educated. It is also usury to charge $30 for a $1 loan. most times banks will rearrange transactions to their benefit. So, a possible $15 overdraft from walmart should result in one $30 fee. But, the bank would rearrange the $15 overdraft before some lower transactions made within the same 24-48 hours to obtain the most overdraft fees as possible. TD banknorth is a gruesome violator, Charging $25 a WEEK for a single overdraft. this is why this legislation is needed, not for the proper banks that charge a reasonable interest rate on a $15 overdraft. I do suggest taking a bank to Small Claims Court, these fees are usury in most states. Google it.
BPNC
May 18, 2009, 8:51am (report abuse)This bill is poorly thought out. Any bank customer today can ask a bank to not pay their overdrafts, and banks will comply. Paying the overdraft, though, is a nice service, particularly if it is your mortgage payment. Or, what if you need money from an ATM late at night, or have all of your groceries bagged and checked out at your grocery store. This bill would force banks to decline the ATM transaction and not let you get cash, or decline the debit card transaction at the grocery store, if there was a chance that you might overdraw your account. How embarrassing would that be? Or dangerous, if you desperately need cash at an ATM. Also, this bill would mean the end of free checking, and all of the fees that banks have begun waiving over the past 10 years as a benefit to the customer will be reinstated immediately. So in the long run, more customers will end up paying more fees (The banks do have to make a profit, guys, remember?? The have stockholders too!) because of this.
GLCON
May 18, 2009, 9:52am (report abuse)The proponents of this Bill should be very. very careful. This has the potential to have many unintended consequences with virtually all of them being negative for consumers. What people fail to point out is that Institutions will continue to charge an average of $27 per item whether it is paid, or in the event of passage of this resolution returned----everytime. There will be no cost of credit because items have been returned, so no high APY (which shouldn't be used for a fee at rate) and therefore no predatory lending(?). But what did the consumer get? The same $27 fee charged and nothing for it. Is that what they really want? Insitutions will have no choice to return all items since the disclosure required to pay any items will be onerous and grossly inefficient. Most Institutions offering overdraft services are doing it the right way with ample disclosure and with consumers having the ability to opt out of they choose.
234234234
May 22, 2009, 7:14pm (report abuse)To the 32 year banking vet: Does your bank offer a checking account without those overdraft fees like all banks did over 10 years ago? I don't think so. This is the only option available and it is a sad option.
You mean to tell me 10 years ago when these criminal rules for overdraft were never there, you didn't make any money? And the order that you selece to apply the charges maximizes your overdraft fees. Is that in the agreement also?
Please, you sound like an idiot. Banks took away our options and gave us this. Too bad if we think it is unfair. If you can't believe this made it to law then you are an idiot. Stop ripping us off and you wont see these laws.
NotABankerTG
May 25, 2009, 4:32am (report abuse)When I was charged 7 overdraft fees when I had $102 in credit union draft account, and $98 in charges...plus one in the "Account Hold" section (the only one which should have been an overdraft)...there is something wrong... I looked into opening a new account, but found out this is a new "practice" of banks. I asked one bank manager...
If a family went to Disneyland for the weekend - based on what was just done to me - and made 50 little transactions for Mouse Ears, drinks, food, trinkets and such but came home and realized on Monday the bank account was overdrawn by $1 (one dollar) - I asked would that account holder be charged 50 overdraft fees for the lack of $1...and I was told "Yes"...
It is this kind of usury that needs to stop. What ever happened to declining a transaction at the counter? I would rather have a momentary embarrassment than try to dig up $150+ dollars to line some bank's pockets...
FLbanker
July 2, 2009, 1:39am (report abuse)"H.R. 1456 is a prime example of what is very wrong with our country today. Citizens are not being responsible for their own actions."
This is also a prime example of banks not being responsible for their own actions.
Ok... my car broke down (Friday). I had 100 dollars in the bank. I bought a new radiator fan for $25, then went back in the store for some $10 for tools, then went back in after the work was done and bought a drinks for $3. Now ballance is $62. Now... My car insurance goes in on Monday for $144, and I am hit with 4 fees for $35 because the charges on friday didn't go in till monday. I thought that was fine. I still have to pay an overdraft for the car insurance... but no... The car insurance went through first, subsequently hitting me for 4 overdrafts instead of 1. Now... according to URResponsible I'm the one with the problem.
EdRules
July 5, 2009, 3:07pm (report abuse)I totally agree that if banks handled this fairly, we wouldn't need this legislation. We ALL ALL ALL make mistakes and can make an error in calculations. By fairly, I mean creditiing the transactions in the order they were actually made so we are only charged fees for the transactions that we are actually overdrawn on. I would have NO problem taking responsibility for this type of occurance. Another serious problem I have with this discussion is that all banks DO NOT allow you to opt out of overdraft fees. I called my bank to opt out of overdraft protection. I was told by the customer service rep that they could not do this because of something to do with my savings account being tied to my checking account. So, instead of granting my simple request, this particular institution has developed a reason to keep charging overdraft fees. That is why this legislation is needed - to protect the consumers who have no voice in these types of policies!!!
fakdabanx
July 10, 2009, 9:58pm (report abuse)I spent a whole day getting money together to make the rent, deposited $1000 in cash. balance was then 1567. rent was $1550 dropped off rent check the next day. balance was still at 1567. check cleared the following day, and then Bang! 4 transactions from 3-4 days previous go through incurring 3 overdraft fees. What kills me is that I had withdrawn what I thought was the correct amount from a separate checking account to cover the rent check, and would have deposited more if I knew I needed to. The previous month the same thing happened when a $150 online transaction didn't show up for several days, until I had managed to make 10 transactions over two days totaling about $65- cigarettes, a couple trips to Carl's junior, two trips to store for energy drinks, some gas,little things- I wish I would've known and just bought everything all at once at least...usury for sure. Ya urresponsible, it's pretty easy for you to judge, i bet u never had to worry much about money.
fakdabanx
July 10, 2009, 10:00pm (report abuse)..because you worked for the banx!! p.s...gimmee back my fakin' money!
grrr
July 21, 2009, 12:43pm (report abuse)I agree with this bill. In my household i handle the majority of our finaces. My wife and i each have our own checking accounts and 1 savings account all joint. Occasionally, maybe once or twice a year we will write a check for a bill from the wrong checking account, and i will have money ready in the other account to cover it. Well when i make this mistake (like i did today) my $98 dollar bill overdrafted my wifes account by $40 well we had 5 other charges post that day (all under $11 and totaled less then $20), becaues they post the largest charge first on the posting date, i will be charged 175 for 5 charges all under 11 each. If the bank charged my account for the smallest transactions first i would have had 1 overdraft fee and my account would only be over drawn by like $20. This is why i am in support of this bill, the practices are not fair, and hurt consumers over honest mistakes. (i have way more then enough money in my other account at the bank to cover the charges).
givemeabreak
September 10, 2009, 11:21am (report abuse)URResponsible , you are not a citizen of this country, a responsible business man , or a father figure to your kids if you believe self GREED is more important
than being a real man.Own up and act like your mama didn't raise a baby man.You are soooo typical of your generation.It makes me sick to be an American when I have to hear sniveling ,whining , brats like you cry about how you need more money , When your living in a million dollar mansion while I am trying to pay rent and feed my family and barely making it.
Mike Balsam
November 19, 2009, 4:09pm (report abuse)LOOOOOOOng over due for all of us, the corporate banks are ripping us off to line their pockets. !!!!!!
No matter what way you spin it, the consumer has been loosing. Good for the politicians who are pushing this. MJB