[Congressional Record Volume 159, Number 40 (Tuesday, March 19, 2013)]
[Extensions of Remarks]
[Pages E335-E336]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          INTRODUCTION OF THE OVERDRAFT PROTECTION ACT OF 2013

                                 ______
                                 

                        HON. CAROLYN B. MALONEY

                              of new york

                    in the house of representatives

                        Tuesday, March 19, 2013

  Mrs. CAROLYN B. MALONEY of New York. Mr. Speaker, I rise to introduce 
the Overdraft Protection Act of 2013.
  With the rise of debit cards and the constant presence of swipe 
terminals to use those cards to pay for everything from dry cleaning to 
gas to candy bars, it's easier than ever for consumers to overdraw 
their checking accounts and incur overdraft fees.
  That's how a cappuccino can become a $35 cappuccino faster than you 
can say ``overdrawn''. Some institutions have responded to consumer 
outrage over these fees by implementing a policy of denying debit card 
transactions that would overdraw an account and I applaud them.
  But too many financial institutions don't make consumers adequately 
aware of the perils of overdrafts, and others reorder the posting of 
transactions in a way that maximizes their fees.
  Although the Federal Reserve issued a rule requiring institutions to 
obtain affirmative consent from consumers to opt into overdraft 
coverage two years ago, it is quite clear more needs to be done to help 
consumers avoid multiple overdrafts.
  A survey released last year by Pew Charitable Trusts highlights the 
need for the bill I am introducing today.
  More than one-third of those surveyed--people who had overdrawn their 
accounts in the past year--didn't know they had overdraft coverage 
until they incurred a penalty fee, and more than half of people did not 
believe they had opted in. The Pew study also found that most of the 
people who overdraft their accounts do so more than once.

[[Page E336]]

  According to Moebs Services, overdraft fees brought in over $31.5 
billion dollars in revenue to financial institutions in 2012.
  As a result of the Federal Reserve's opt-in requirement the number of 
overdrafts has fallen, but some institutions have responded to the drop 
by increasing the price of overdraft fees and continuing to 
intentionally manipulate the transactions' posting order in a way that 
maximizes the fees they can earn from this service.
  My bill increases disclosure to consumers, limits the fees' price and 
frequency, and bans the manipulation of transactions.
  Specifically, the Overdraft Protection Act will: require consumer 
consent before banks can permit overdraft fees to paper checks, 
automated charges and debit card swipe-terminal transactions; require 
that fees be ``reasonable and proportional'' to the amount of the 
overdraft; cap the number of fees that can be charged at one per month 
and six per year; prohibit banks from manipulating the sequence in 
which checks and other debits are posted if it causes more overdrafts 
and maximizes fees paid to banks; require that consumers be warned at 
ATMs if their withdrawals will trigger an overdraft; require the CFPB 
to study the practices of pre-paid cards and if necessary extend these 
provisions to those products.
  The Overdraft Protection Act will ensure consumers are protected from 
misleading practices and I urge my colleagues to support this important 
legislation.

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