The CFPB has begun looking into the nation's banks and their overdraft protection and fee policies. A lot of customers are less than thrilled with the way that a ton of banks deal with them. Source for this article: CFPB looking into overdraft protection policies
Protection for consumers unknown
Overdraft protection from banks is kind of sneaky; consumers used to be automatically enrolled without their knowledge, until the Dodd-Frank Act mandated banks ask customers for their consent to enroll in overdraft protection.
The trouble, according to CBS, is that a number of people are not aware they have overdraft protection. The Pew Charitable Trust found in a recent survey that 54 percent of respondents who incurred an overdraft fee in the past year had no idea they had overdraft protection on their checking account. A further 37 percent of people who had over drafted knew they had overdraft protection and 8 percent didn't know whether they had overdraft protection or not.
There was a ton who did not know overdraft protection was even provided at their bank. They did not realize this until they were given the fee for it.
An issue to be taken care of by the CFPB
Overdraft fees are a concern for the Consumer Financial Protection Bureau, according to Bloomberg. Shady procedures on the part of banks is matter of a series of inquiries the CFPB is currently conducting, which aims to examine the overdraft fee and overdraft protection procedures of nine major banks.
The Consumer Financial Protection Bureau is looking at advertising materials and consumer experiences to determine if major banking organizations, which include Wells Fargo, Chase bank, Bank of America and others, are following federal guidelines on overdraft charges and protection and if perhaps tighter regulations are needed.
Moebs Services found that overdraft charges vary by bank, as small banks have lower overdraft fees around $25 and big banks have fees around $35 per instance. It also found that last year, there were $33.1 billion in overdraft charges. That number was $31.6 billion in 2011.
Getting customers to sign on
Many of the people in the Pew survey, according to CBS, didn't know that they were opting in for overdraft protection. Even after many read the forms they signed, they believed they were opting out of overdraft protection plans. It's not known whether this is due to customers misreading it or if deceptive marketing is part of the reason the CFPB is having a look at overdraft policies, according to Bloomberg.
The survey also found that a lot of people do not want the charges. About 75 percent said they would rather have a declined transaction.