Status
The Consumer Financial Protection Bureau (CFPB) issued its proposed Overdraft Protection (ODP) rule on November 17, 2024.
Our Position
DCUC still believes consumers and the market should determine whether ODP fees are too high. Accordingly, DCUC will offer comments on CFPB proposed rule in line with the rest of the industry.
However, in light of pending regulations, DCUC encourages credit unions to plan for stricter regulatory limits on ODP programs and implement necessary changes accordingly.
Background
The Consumer Financial Protection Bureau (CFPB) announced plans to crack down on the use of overdraft protection programs and fees after finding the charges generated almost $16 billion in revenues for financial institutions in 2019.
The CFPB’s proposed rule outline:
The new regulation would likely go into effect October 1, 2025.
Resources
Handouts of DCUC's current advocacy priorities are available for download. These handouts include information on each advocacy priority and talking points you can use when contacting your state representatives and senators.
The Consumer Financial Protection Bureau (CFPB) issued its proposed Overdraft Protection (ODP) rule on November 17, 2024.
Our Position
DCUC still believes consumers and the market should determine whether ODP fees are too high. Accordingly, DCUC will offer comments on CFPB proposed rule in line with the rest of the industry.
However, in light of pending regulations, DCUC encourages credit unions to plan for stricter regulatory limits on ODP programs and implement necessary changes accordingly.
Background
The Consumer Financial Protection Bureau (CFPB) announced plans to crack down on the use of overdraft protection programs and fees after finding the charges generated almost $16 billion in revenues for financial institutions in 2019.
The CFPB’s proposed rule outline:
- Applies to financial institutions over $10 billion in assets.
- Allows fees to cover the costs and losses associated with providing the service for “courtesy” overdrafts — either a “breakeven” fee based on the institution’s own calculation or a benchmark fee. CFPB is proposing several options for the benchmark fee, ranging from $3 to $14.
- The proposed rule would also allow “profitable overdraft loans” provided the terms are disclosed according to existing lending laws that apply to traditional credit cards.
- “The rule would close a longstanding loophole in the rules implementing the Truth in Lending Act that has allowed banks to lend money to consumers to cover overdrawn accounts without having to worry about consumer protections that govern other forms of consumer credit,” CFPB Director Chopra said.
The new regulation would likely go into effect October 1, 2025.
Resources
Handouts of DCUC's current advocacy priorities are available for download. These handouts include information on each advocacy priority and talking points you can use when contacting your state representatives and senators.