Dodd unveils bill on overdraft fees
Senate Banking Committee Chairman Christopher Dodd said that he would introduce a bill to protect consumers from abusive checking account overdraft fees. According to Moeb's Services, banks will collect a record $38.5 billion in fees for customer overdrafts this year.
Customers are often unknowingly enrolled in "overdraft protection programs" that enable them to overdraw their accounts when they make debit card purchases, electronic transfers, ATM withdrawals or use checks, the Senate Committee on Banking, Housing, and Urban Affairs said in a news release today, adding that people can incur fees upwards of $30 for this "courtesy" even if their account is only overdrawn by a few cents.
The news release said that the bill would:
· Require banks to get customers' consent before enrolling them in an overdraft protection program for ATM and debit card transactions;
· Limit the number of overdraft coverage fees banks can charge to one per month and six per year;
· Require fees be proportional to the cost of processing the overdraft;
· Stop institutions from manipulating the order in which they post transactions in order to rack up extra fees;
· Require customers be notified when they overdraw their account and be given the option of being notified by e-mail, text or traditional mail; and
· Require that customers be warned if an ATM or branch teller transaction will overdraw their account, and be given the chance to cancel the transaction.
-- Melissa Rohlin