CFPB needs to hear from you on its overdraft proposal

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This week, Cornerstone League alerted credit union leaders to the comment call on the Consumer Financial Protection Bureau’s proposed overdraft proposal.

The deadline for the CFPB receiving your comment call is April 1, 2024.

This rule would severely limit the ability of very large financial institutions (those over $10 billion) to provide overdraft fees and overdraft loans. Although most credit unions are well under the asset-size threshold and are therefore exempt from the proposal, make no mistake, credit unions of all sizes will be impacted if this proposal passes.

First, the proposal would require very large financial institutions to treat overdraft loans like credit cards and other loans, as well as to provide clear disclosures and other protections. Second, the proposed rule would cap overdraft fees. It would allow very large financial institutions to charge an overdraft fee only in line with their actual costs (difficult to determine definitively) or in accordance with an established benchmark. The CFPB has proposed benchmarks of $3, $6, $7, or $14 and is seeking comment on the appropriate amount.

Additionally, the proposal would prohibit compulsory use of preauthorized electronic fund transfers (EFTs) for repayment of covered overdraft credit provided by very large financial institutions. As a result of this change, covered overdraft credit offered by very large financial institutions could not be conditioned on consumers agreeing to automatic debits from their checking account.

Please visit Cornerstone’s website for details on:

• How and where to submit your comment.
• Items your comment must include.
• Other comments submitted that you can read.
  
• Suggested talking points.

Remember to copy Cornerstone Regulatory Compliance Counsel Suzanne Yashewski on your letter, or email her if you have questions.