A group of financial trade associations led by the American Bankers Association (ABA) has urged the Consumer Financial Protection Bureau (CFPB) to conduct a study of consumers’ overdraft preferences and release the results before acting on overdraft practices.
The financial trade group pointed to findings from a recent Morning Consult survey that found nine in 10 U.S. adults find their bank’s overdraft protection valuable, and that three in four were satisfied when their payment was covered when overdraft protection overdrafts was used.
“Restrictions on overdrafts may cause financial institutions to stop offering these services to their customers, which would lead to many more returned checks and dishonored transactions,” warns the group.
He said this could lead to unnecessary damage to credit rating, item return fees charged by the institution or merchant, landlord and other fees, or payment requirements using alternative methods. such as the mandate.
The group also cited a survey by research firm Curinos, which found that 62% of consumers would reconsider their support for new overdraft regulations if it limited access to the service.
In addition, the group recommended that the CFPB research frequent users of overdrafts to ensure that they fully understand how and why these consumers use overdrafts, as well as the level of understanding of overdraft offers.
“In the absence of compelling evidence of gaps in knowledge or that consumers are using the product irrationally – that is, evidence that regular users of overdraft protection do not understand the product and its costs relative to available alternatives – people should be expected to be the best judges of what is in their best interests and should remain free to choose,” note the group.
The groups’ letter follows the bureau’s release of two research reports in December that said it would act on overdraft fees and ‘take action’ overdraft fees and “strengthen its oversight and enforcement of banks that rely heavily on overdraft fees.”
