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The following is a summary of the Consumer Overdraft Protection Fair Practices Act, a bill expected to be reintroduced in Congress this year sponsored by Rep. Carolyn Maloney, D-N.Y., Sen. Bernie Sanders, I-Vt., and Rep. Barney Frank, D-Mass.
To learn more about the issues the bill is addressing,
see the Bankrate feature, "FDIC
study: outrageous overdraft fees," and a summary of the FDIC study's
results.
The bill:
Prohibits depository institutions from imposing any fee in connection with an overdraft protection program or service unless the consumer has provided specific written consent for the program or service.
Requires written disclosure of all terms and charges related to
overdraft protection programs and services, including the amount
of any fees charged to cover overdrafts, types of transactions covered,
time period in which the consumer must repay an overdraft and the
circumstances under which the institution will not pay an overdraft.
Prohibits depository institutions from claiming they will cover
all overdrafts on a consumer's account when they reserve the ability
to pay overdrafts on a discretionary basis.
Prohibits depository institutions from engaging in any pattern
or practice of delaying the posting of deposits or manipulating
the posting of any check against an account for the purpose of creating
overdrafts that require overdraft protection fees.
Requires ATMs operated by the institution that holds a consumer's
account to provide the actual dollar balance of the consumer's account
in response to a balance inquiry rather than any higher amount the
institution will cover as overdrafts.
Requires ATMs operated by an institution that holds a consumer's account to notify the consumer when a requested transaction may trigger an overdraft protection fee and permit the consumer to cancel the transaction and avoid the fee.
Prohibits advertisements by depository institutions that portray
overdraft protection as short-term credit or that claim consumers
may maintain negative account balances when consumers are required
to promptly repay all overdrafts.
Clarifies that fees charged for the most widely advertised, nontraditional forms of overdraft protection are "credit" for purposes of all relevant consumer disclosures required by the Truth in Lending Act and Regulation Z.
Source: U.S. House of Representatives
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