[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 1595 Introduced in Senate (IS)]
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116th CONGRESS
1st Session
S. 1595
To amend the Truth in Lending Act to limit overdraft fees and establish
fair and transparent practices related to the marketing and provision
of overdraft coverage programs at depository institutions, and for
other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 22, 2019
Mr. Booker (for himself and Mr. Brown) introduced the following bill;
which was read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
_______________________________________________________________________
A BILL
To amend the Truth in Lending Act to limit overdraft fees and establish
fair and transparent practices related to the marketing and provision
of overdraft coverage programs at depository institutions, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Stop Overdraft Profiteering Act of
2019''.
SEC. 2. FINDINGS AND PURPOSE.
(a) Findings.--Congress finds the following:
(1) Overdraft coverage is a form of short-term credit that
depository institutions market for consumer transaction
accounts. Historically, depository institutions covered
overdrafts for a fee on an ad hoc basis.
(2) With the growth in specially designed software programs
and in consumer use of debit cards, overdraft coverage for a
fee has become more prevalent.
(3) Many depository institutions market a range of
overdraft options but aggressively encourage consumers to
consent to the most expensive option, where a high flat fee is
collected for every individual overdraft transaction.
(4) Many depository institutions collect a high flat fee,
including for small dollar transactions, each time the
institution covers an overdraft, impose multiple overdraft
coverage fees within a single day, and charge additional fees
for each day during which the account remains overdrawn.
(5) Such abusive practices in connection with overdraft
coverage fees have deprived consumers of meaningful options and
placed significant financial burdens on low- and moderate-
income consumers.
(b) Purpose.--It is the purpose of this Act to protect consumers by
limiting abusive overdraft coverage fees and practices and by providing
meaningful disclosures and consumer choice in connection with overdraft
coverage fees.
SEC. 3. DEFINITIONS.
In this Act:
(1) CFPB.--The term ``CFPB'' means the Bureau of Consumer
Financial Protection.
(2) Depository institution; overdraft; overdraft coverage
fee; transaction account; nonsufficient fund fee.--The terms
``depository institution'', ``overdraft'', ``overdraft coverage
fee'', ``transaction account'', and ``nonsufficient fund fee''
have the meanings given the terms in 140B(p) of the Truth in
Lending Act, as added by section 4 of this Act.
SEC. 4. FAIR MARKETING AND PROVISION OF OVERDRAFT COVERAGE PROGRAMS.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by adding at the end the following:
``Sec. 140B. Overdraft coverage program disclosures and consumer
protection
``(a) Prohibitions.--No depository institution may engage in acts
or practices in connection with the marketing of or the provision of
overdraft coverage that are designed to evade the provisions of this
section.
``(b) Marketing Disclosures.--Each depository institution that
provides or offers to provide overdraft coverage with respect to
transaction accounts held at that depository institution shall clearly
and conspicuously disclose in all marketing materials for such
overdraft coverage any overdraft coverage fees with respect to such
overdraft coverage.
``(c) Overdraft Coverage Fees.--
``(1) In general.--Except as provided in paragraph (2), no
depository institution may charge an overdraft coverage fee for
any transaction--
``(A) at an automated teller machine; or
``(B) involving a one-time debit card transaction.
``(2) Overdraft fees permitted for checks and automatic
recurring payments.--A depository institution may charge an
overdraft coverage fee for a check or an automatic recurring
payment as part of an overdraft coverage program that
incorporates the requirements identified in subsections (d)
through (l).
``(d) Consumer Consent Opt-In.--A depository institution may charge
overdraft coverage fees with respect to the use of checks or automatic
recurring payments only if--
``(1) the depository institution has waited at least 3 days
after opening an account to offer the overdraft coverage
program; and
``(2) the consumer has consented in writing, in electronic
form, or in such other form as is permitted under regulations
of the Bureau.
``(e) Consumer Disclosures.--Each depository institution shall
clearly disclose to each consumer covered by an overdraft protection
program of that depository institution--
``(1) that the consumer may be charged for not more than 1
overdraft coverage fee in any single calendar month and not
more than 6 overdraft coverage fees in any single calendar
year, per transaction account;
``(2) information about any alternative overdraft products
that are available (such as linked accounts, lines of credit,
and alerts), including a clear explanation of how the terms and
fees for such alternative services and products differ; and
``(3) such other information as the Bureau may require, by
rule.
``(f) Periodic Statements.--Each depository institution that offers
an overdraft coverage program shall, in each periodic statement for any
transaction account that has an overdraft coverage program feature,
clearly disclose to the consumer the dollar amount of all overdraft
coverage fees and nonsufficient fund fees charged to the consumer for
the relevant period and year to date.
``(g) Exclusion From Account Balance Information.--No depository
institution may include the amount available under the overdraft
coverage program of a consumer as part of the transaction account
balance of that consumer and the transaction account balance shall be
more prominently displayed than any amount available under the
overdraft coverage program.
``(h) Prompt Notification.--Each depository institution shall
promptly notify consumers, through a reasonable means selected by the
consumer, when overdraft coverage has been accessed with respect to the
account of the consumer, not later than on the day on which such access
occurs, including--
``(1) the date of the transaction;
``(2) the type of transaction;
``(3) the overdraft amount;
``(4) the overdraft coverage fee;
``(5) the amount necessary to return the account to a
positive balance; and
``(6) whether the participation of a consumer in an
overdraft coverage program will be terminated if the account is
not returned to a positive balance within a given time period.
``(i) Terminated or Suspended Coverage.--Each depository
institution shall provide prompt notice to the consumer, using a
reasonable means selected by the consumer, if the institution
terminates or suspends access to an overdraft coverage program with
respect to an account of the consumer, including a clear rationale for
the action.
``(j) Overdraft Coverage Restrictions and Fee Limits for Checks and
Automatic Recurring Payments.--
``(1) Frequency.--A depository institution may charge not
more than 1 overdraft coverage fee in any single calendar
month, and not more than 6 overdraft coverage fees in any
single calendar year, per transaction account.
``(2) Reasonable and proportional overdraft coverage
fees.--
``(A) In general.--The amount of any overdraft
coverage fee shall be reasonable and proportional to
the cost to the financial institution in providing the
overdraft coverage for that transaction, including the
cost to the financial institution of funds and other
costs directly associated with the transaction.
``(B) Safe harbor rule authorized.--The Bureau, in
consultation with the Board of Governors of the Federal
Reserve System, the Comptroller of the Currency, the
Board of Directors of the Federal Deposit Insurance
Corporation, and the National Credit Union
Administration Board, may issue rules to provide an
amount for any overdraft coverage fee that is presumed
to be reasonable and proportional to the costs to the
financial institution in providing the overdraft
coverage for the transaction.
``(3) Posting order.--Each depository institution shall
post transactions with respect to transaction accounts in such
a manner that minimizes overdraft coverage fees and
nonsufficient fund fees.
``(k) Debit Holds.--No depository institution may charge an
overdraft coverage fee on any category of transaction, if the overdraft
results solely from a debit hold amount placed on a transaction account
that exceeds the actual dollar amount of the transaction.
``(l) Nondiscrimination for Not Opting In.--In implementing the
requirements of this section, each depository institution shall provide
to consumers who have not consented to participate in an overdraft
coverage program transaction accounts having the same terms,
conditions, or other features as those that are provided to consumers
who have consented to participate in such overdraft coverage program,
except for features of such overdraft coverage.
``(m) Nonsufficient Fund Fee Limits.--No depository institution may
charge any nonsufficient fund fee with respect to--
``(1) any transaction at an automated teller machine; or
``(2) any debit card transaction.
``(n) Reports to Consumer Reporting Agencies.--
``(1) In general.--No depository institution may report
negative information regarding the use of overdraft coverage by
a consumer to any consumer reporting agency, as defined in
section 603 of the Fair Credit Reporting Act (15 U.S.C. 1681a),
when the amounts of the overdraft are repaid under the terms of
an overdraft coverage program.
``(2) Deletion.--A depository institution shall request
that the consumer reporting agency described in paragraph (1)
delete any previously reported negative information, including
closure of an account due to unpaid overdrafts, if the consumer
repays the overdrafts or tenders payment for the overdrafts to
the depository institution or its successor.
``(o) Rule of Construction.--No provision of this section may be
construed as prohibiting a depository institution from retaining the
discretion to pay, without assessing an overdraft coverage fee or
charge, an overdraft incurred by a consumer.
``(p) Definitions Relating to Overdraft Coverage.--For purposes of
this section:
``(1) Check.--The term `check'--
``(A) has the meaning given the term in section 3
of the Check Clearing for the 21st Century Act (12
U.S.C. 5002); and
``(B) does not include a traveler's check.
``(2) Depository institution.--The term `depository
institution' means any entity described in clauses (i) through
(vi) of section 19(b)(1)(A) of the Federal Reserve Act (12
U.S.C. 461(b)(1)(A)).
``(3) Nonsufficient fund fee.--The term `nonsufficient fund
fee' means a fee or charge assessed in connection with an
overdraft for which a depository institution declines payment.
``(4) Overdraft.--The term `overdraft' means, in a
withdrawal by check or other debit from a consumer transaction
account in which there are insufficient or unavailable funds in
the account to cover such check or debit, the amount of such
withdrawal that exceeds the available funds in the account.
``(5) Overdraft coverage.--The term `overdraft coverage'
means the payment of a check presented or other debit posted
against a consumer transaction account by the depository
institution in which such account is held, even though there
are insufficient or unavailable funds in the account to cover
such checks or other debits.
``(6) Overdraft coverage fee.--The term `overdraft coverage
fee'--
``(A) means any fee or charge assessed in
connection with overdraft coverage, or in connection
with any negative account balance that results from
overdraft coverage; and
``(B) does not include--
``(i) a periodic rate in connection with an
extension of credit through an overdraft line
of credit program; and
``(ii) a fee or charge imposed in
connection with any transfer from an account
linked to another transaction account.
``(7) Overdraft coverage program.--The term `overdraft
coverage program' means a service under which a depository
institution assesses an overdraft coverage fee for overdraft
coverage.
``(8) Transaction account.--The term `transaction account'
has the meaning given the term in section 19(b)(1) of the
Federal Reserve Act (12 U.S.C. 461(b)(1)).''.
(b) Technical Amendment.--The table of contents for chapter 2 of
the Truth in Lending Act is amended by inserting after the item
relating to section 140A the following:
``140B. Overdraft coverage program disclosures and consumer
protection.''.
SEC. 5. REGULATORY AUTHORITY OF THE CFPB.
Not later than 2 years after the date of the enactment of this Act,
the CFPB shall issue such final rules and publish such model forms as
necessary to carry out section 140B of the Truth in Lending Act, as
added by section 4 of this Act.
SEC. 6. EFFECTIVE DATE.
(a) In General.--This Act and the amendments made by this Act shall
take effect 1 year after the date of the enactment of this Act, whether
or not the rules of the CFPB under this Act or such amendments are
prescribed in final form.
(b) Moratorium on Fee Increases.--During the 1-year period
beginning on the date of the enactment of this Act, no depository
institution may increase the overdraft coverage fees or charges
assessed on transaction accounts for paying a transaction (including a
check or other debit) in connection with an overdraft or for
nonsufficient funds.
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