CFPB Overdraft Protection


In February, the Consumer Financial Protection Bureau (CFPB) issued a Notice and Request for Information (Notice) for feedback from consumers and banks on overdraft protection programs (ODP).  Following requests from several stakeholders, the CFPB agreed to extend the April 30th deadline for response to June 29th.  

IBAT urges each of its members to take advantage of this opportunity to make their voice heard in advance of the CFPB issuing rules or guidance affecting ODP. The Notice includes 12 questions regarding ODP, most of which need to be answered with information known only to banks offering ODP. Please forward this Notice to your Head Cashier, Chief Operations Officer, and/or Compliance Officer and ask them to prepare answers to these questions on or before June 29th.  Consumers will likely respond in large numbers; it is important that the CFPB receive reasoned, knowledgeable answers to the questions from community banks.

On April 30, IBAT filed a comment letter in response to the CFPB’s request for information, asserting to the CFPB that the FDIC’s statistics on ODP reflect a product that is working, not failing.  IBAT’s letter informed the CFPB of the background of overdraft payments, consumer alternatives, customer disclosures and information resources, data processing and technology challenges, the economic framework, promotion of responsible use, heavy users, and daily limits.  The letter concluded by stating that overdraft protection is working for the vast majority of customers, and requesting the CFPB to issue guidance recommending (1) customer disclosures for customers with ODP and (2) a fresh start loan approach for those ODP customers who don’t bring their accounts current.

Bank responses to the Notice will focus on the specifics of your overdraft program.  To assist you in drafting a response to this, and other comment requests, IBAT recently published helpful tips in the May/June edition of The Texas Independent Banker magazine.