CFPB Proposes Rule to Close Bank Overdraft Loophole that Costs Americans Billions Each Year in Junk Fees
- Source: consumerfinance.gov
Banks over $10 billion in assets who offer overdraft lending services would now be subject to Truth in Lending Act and Other Consumer Financial Protection Laws, specifically related to interest rate disclosure or a fee based on the banks cost to offer the product with proof of cost data. Such changes would require changes to overdraft policies, procedures, and controls.
Our team can:
- Assess the applicability and impact of the proposed changes to your institution.
- Identify and inventory the applicable laws, rules and regulations, accounts/products, processes, and controls and identify the enhancements and changes necessary to ensure compliance and ongoing effectiveness.
- Establish and lead project management of the necessary operational, risk, and control impacts.
- Identify and assist in the ongoing monitoring and testing of the fee related changes once implemented.
The guidance proposed by the CFPB on January 17th covers the history and impact of overdraft fees, the historical basis for the Truth in Lending Loophole, the depositories that would be in-scope (175 banks), the new treatment expected for overdraft loans, the potential fee benchmark options, and the CFPB’s junk fee efforts to date.
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