Consumer Financial Protection Bureau Director Richard Cordray said a new report released on Tuesday raises concerns about the ability of consumers to anticipate and avoid overdraft charges.
The recent CFPB report revealed the country’s larger financial institutions have stark differences in their handling of overdraft opt-in rates and costs.
The study identified some institutions had at least 40 percent of new customers opting in for overdraft protection but other institutions had less than 10 percent.
“The gap may reflect differences in the substance of overdraft programs, or differences in customer base, or differences in marketing approaches,” Cordray said. “On this point, we are interested to dig in and learn more about the reasons why.”
The CFPB will conduct further research into three main takeaways that were found in the report. First, the CFPB will explore why overdraft protection of ATM and debit card transactions are more costly for consumers and result in a higher rate of involuntary account closures.
A second area of study will focus on simplifying and unifying overdraft protection policies, procedures and practices for banks and credit unions across the country. In addition, the bureau will examine the transparency efforts that financial institutions take to notify customers when a particular check or debit card transaction will post.
Cordray said CFPB plans to carefully examine these areas before taking action through a transparent policy process.