Bank of America Corp. could lose as much as $480 million in annual revenue due to new rules from the Consumer Financial Protection Bureau that will prevent banks from reordering transactions to incur overdraft charges.
The losses could come out to be three percent of 2011 earnings after the rules take effect. Several large banks like Citigroup, U.S. Bancorp and BB&T have already stopped using the practice in order to gain approval from regulators. Bank of America, however, is still one of 12 big banks, including JPMorgan Chase and Wells Fargo, that processes transactions from highest to lowest value rather than chronologically, according to TheStreet.com.
Consumer advocates have argued against the practice of reordering transactions, saying that banks attempt to maximize overdraft revenue by causing the account to be wiped out.
The bank stopped charging traditional overdraft fees in 2010 and has since replaced that system with one that allows bank customers to link savings accounts to debit and credit cards. Should the account be overdrawn, for a fee, the bank would automatically cover the purchase using funds from the linked savings account, The Street.com reports.
The Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. have already issued guidance in opposition to the practice, though the CFPB has yet to issue a ruling on the matter.