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CFPB Launches Inquiry Into Overdraft Practices

Posted on 2/22/2012

The Consumer Financial Protection Bureau yesterday launched an inquiry into overdraft protection program practices to determine how they are affecting consumers. The bureau added that it is asking a number of unidentified banks for data on their overdraft policies, terms and marketing, and it also has issued a notice and request for information from the public.

The CFPB said the inquiry -- which started with a late-afternoon field hearing at Hunter College in New York -- is focused on four main areas: transaction reordering that increases consumer costs; missing or confusing information about overdraft program terms; misleading marketing materials; and the disproportionate impact such programs may have on low-income and young consumers.

The bureau also is seeking feedback on a prototype "penalty fee box," a new disclosure that would appear on checking account statements to highlight the amount of money overdrawn and the total overdraft fees charged each month.

"[O]verdraft practices have the capacity to inflict serious economic harm on the people who can least afford it," CFPB Director Richard Cordray said in a press release. "We want to learn how consumers are affected, and how well they are able to anticipate and avoid paying penalty fees."

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