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House Bill Introduced to Limit Overdraft Fees

Posted on 5/14/2012

House Financial Services Committee member Carolyn Maloney (D-N.Y.) last week introduced a bill that would require banks to obtain consent before activating overdraft fees for paper checks, automated clearing house charges and debit card transactions.

The legislation also would require that fees be "reasonable and proportional" to the amount of the overdraft; prohibit banks from changing the sequence in which they process transactions if it creates more overdrafts and maximizes the fees paid; limit the number of fees that can be charged to one per month and six per year; require the Consumer Financial Protection Bureau to conduct a study on prepaid debit card overdraft fees; and grant the CFPB rulemaking authority over such fees.

"The Federal Reserve opt-in rule for debit card overdrafts has been in effect since August, 2010. But it is quite clear more needs to be done in the area of consumer disclosures and to help consumers avoid multiple overdrafts," Maloney said in a press release.

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