Trade Associations Say CFPB's Overdraft Research Reports Lacked Important Facts

Source: S&P Global Market Intelligence

Five trade associations said the Consumer Financial Protection Bureau's two research reports on overdraft, issued Dec. 1, 2021, lacked important facts about overdraft services, namely information about the consumers who use and value the product.

The American Bankers Association, Consumer Bankers Association, Credit Union National Association, National Association of Federally-Insured Credit Unions and National Bankers Association expressed their concern in a Jan. 13 letter addressed to CFPB Director Rohit Chopra.

"The [b]ureau's activities related to overdraft should not be a 'gotcha' exercise through enforcement," they said. "Instead, any changes to supervisory expectations or guidance applicable to overdraft should be made transparently and should be based on current and complete data."

The associations said they wrote to provide recommendations for additional data development and analysis to promote their shared goal of understanding the market, the options available to consumers, and consumer understanding and experience with overdraft services.

The associations urged the CFPB to conduct a study of consumers' preferences regarding overdraft prior to taking further action. They also said the regulator should focus on frequent users of overdraft to develop data on regular users, who will be most impacted by any modifications on how regulators treat overdraft.

Furthermore, the CFPB should look into the amount of the charge that caused each overdraft, the amount of late and other penalty fees avoided by the institutions honoring the charge, and the rate by which institutions waive overdraft fees, the associations mentioned.

The associations urged the bureau to publish another data point on its research after the completion of the studies and before proposing policy recommendations. The regulator should also invite the public to comment on its research methodologies, statistical findings and conclusions about the need for and format of further regulatory action, the associations said.