Published: August 2022

Addressing abusive overdraft fees would greatly benefit the most vulnerable consumers

Nearly a hundred state and local organizations, in a letter to the House Financial Services Committee, voiced their support for the Overdraft Protection Act of 2021 (HR 4277). The legislation would address the most abusive provisions of typical overdraft coverage—bank practices that have a particularly devastating effect on lower-income consumers and communities of color.

Consumer Action joined more than 90 of its allies in voicing support for the Overdraft Protection Act of 2021 (HR 4277). The long-standing bill, drafted by Congresswoman Carolyn Maloney (D-NY), is a crucial step toward ending excessive overdraft fees. These fees can be financially devastating, disproportionately impacting the most vulnerable account holders, including Black and Latino communities. In addition to contributing to household financial insecurity, the cycle of fees can push consumers out of the banking system entirely and into expensive alternative banking products. This legislation would, among other things, require that overdraft fees be "reasonable and proportional" to the cost to the institution of processing the transaction; limit the number of overdraft fees institutions can charge to one per month and six per year; prohibit overdraft fees on any transaction that results from a debit hold placed on an account that exceeds the actual dollar value of the transaction; and prohibit institutions from reordering transactions to maximize fees. (The bill was passed by the House a few days later, on July 28.)

Lead Organization

Americans for Financial Reform and Consumer Federation of America

More Information

Click here to read the letter in full.

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Addressing abusive overdraft fees would greatly benefit the most vulnerable consumers   (Overdraft-Protection-Bill-Letter-7.26.22.pdf)