[Congressional Record (Bound Edition), Volume 158 (2012), Part 5]
[Extensions of Remarks]
[Pages 6491-6492]
[From the U.S. Government Publishing Office, www.gpo.gov]




          INTRODUCTION OF THE OVERDRAFT PROTECTION ACT OF 2012

                                  _____
                                 

                        HON. CAROLYN B. MALONEY

                              of new york

                    in the house of representatives

                         Wednesday, May 9, 2012

  Mrs. MALONEY. Mr. Speaker, I rise to introduce the Overdraft 
Protection Act of 2012.
  With the rise of debit cards and the constant presence of swipe 
terminals to use those cards to pay for everything from McDonald's 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 fancy $5 cup of coffee can become a $35 cup of coffee 
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 aware of the 
perils of overdrafts, and most 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 in the 
area of consumer disclosures and to help consumers avoid multiple 
overdrafts.

[[Page 6492]]

  A survey released last week 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 their bank offered 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.
  According to Moebs Services, overdraft fees brought in over $31 
billion dollars in revenue to financial institutions in 2011.
  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 cost 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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