Sen. Cory Booker (D-N.J.) sent a letter to more than a dozen banks Monday to inquire about their overdraft-fee programs.
The news comes after the Consumer Financial Protection Bureau filed a lawsuit against TCF National Bank in January, after the agency alleged that bank employees mislead customers into signing up for overdraft services.
Overdraft is offered by banks for customers who make purchases with their debit card, even if they lack sufficient funds in their account but are charged for the service. Many banks make the service optional for account holders, but a 2014 study by The Pew Charitable Trusts showed that across all banks, roughly half of account holders who overdrew their accounts paid a fee that they didnt recall consenting to.
Federal law requires banks to obtain customer consent before enrolling them in overdraft programs. But the CFPB said in its lawsuit that banks like TCF used confusing practices to get customers to agree to the services.
Consumers usually get charged $35 in overdraft fees when they spend more money than they have in their accounts.
Im concerned that too many of our nations banks are increasingly driven to accumulate these [overdraft] fees, rather than pursue a business model that serves their communities, and are adopting certain practices to drive participation in so-called overdraft protection programs, Booker said in a letter obtained by The Post.
Booker sent the letter to 13 banks: Chase Bank, Wells Fargo, Bank of America, TD Bank, PNC Bank, SunTrust Bank, Regions Bank, Branch Banking and Trust (BB&T), Woodforest Bank, Ameris Bank, Bank Plus, U.S. Bank, and Ocean Bank. Bookers spokesman Kristin Lynch said he chose these banks because they represent the top 10 U.S. banks in overdraft and non-sufficient-funds revenue.
According to the Federal Deposit Insurance Corp., last year banks in general made more than $11 billion in consumer overdraft fees. In the first quarter for this year they collected $2.78 billion in fees.
In his letter, Booker asks banks to respond by Aug. 11 with information on the banks dependence of overdraft fees, consent and transparency, employee incentives to increase overdraft fees and alternatives to overdraft penalties.
