Sen. Sherrod Brown (D-Ohio) introduced a bill on Monday designed to eliminate predatory overdraft fees and to require banks to disclose their transaction ordering policy to help consumers avoid overdraft fees.
In a report issued by the CFPB last month, the agency revealed that banks’ use of processing and fee-assessment system was so varied that consumers are unable to anticipate or avoid the fees, Cleveland.com reports.
The CFPB also found that consumers who opt in to overdraft protection programs pay approximately seven times more in bank fees, occasionally because banks re-order transactions to make it more likely that consumers will incur fees. On average, consumers pay $34 per overdraft item.
“Banks should play by the rules instead of purposefully ‘reordering’ their costumers’ debit card transactions so that they profit while consumers rack up costly penalties,” Brown said. “My bill would put a stop to this by empowering the Consumer Financial Protection Bureau to crack down on banks that employ predatory practices. It also would allow the CFPB to establish fair guidelines to protect consumers and the banks and credit unions that play fair with their customers.”
Under Brown’s legislation, banks would be required to post transactions in a manner that is clear to customers. The CFPB would also gain the authority to monitor banks’ overdraft practices to ensure they are not predatory or unfair.