This legislation protects consumers and needs your support…

Consumers paid over $36 billion in bank, thrift and credit union fees according to the Government Accountability Office (GAO), with overdraft fees rising 11% between 2000 and 2007. The Center for Responsible Lending estimates that Americans pay $17.5 billion per year in fees for services they never asked for and can’t afford. Overdraft protection can be beneficial but a recent study validates consumer complaints that they were signed-up, unknowingly, for overdraft protection by banks and financial institutions.

The GAO sent investigators, posing as consumers, to 185 banks requesting information about banking and savings fees. One-fifth of those institutions failed to provide a comprehensive list of fees, as is required by federal law. One third failed to disclose terms and conditions. In addition, half of the banking Web sites studied did not provide information on fees.

The Consumer Overdraft Protection Fair Practices Act, H.R. 946, was introduced to Congress last year and helps protect consumers from abusive overdraft practices by extending provisions of the Truth in Lending Act. The new legislation requires banks to obtain customers’ permission before charging overdraft fees and to disclose those fees in real time on automated teller machine and debit transactions. Here’s an overview of the Act:

• Allow consumers to compare the cost of overdraft loans with the cost of other credit options by requiring Truth in Lending Act (TILA) disclosures.
• Require financial institutions to obtain written consent from both new and existing account holders in order to enroll them in an overdraft loan program.
• Require financial institutions to warn customers when an ATM withdrawal will trigger a fee - and allow customers to cancel the transaction at that time.
• Prohibit financial institutions from manipulating the order of check clearing so as to increase customers’ overdraft loan fees.

Representatives Carolyn Maloney (D-NY), Barney Frank (D-MA), and Julia Carson (D-IN) introduced H.R. 946, the Overdraft Protection Fair Practices Act, in February 2007. In 2005, Rep. Maloney introduced a similar bill (H.R. 3449), which was never voted on - and never passed. Make sure the second bill doesn’t get abandoned (again)! You can show your support for the Overdraft Protection Fair Practices Act here…

* Learn more about the Overdraft Protection Fair Practices Act>

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This entry was posted on Thursday, April 10th, 2008 and is filed under: Credit News. Follow through RSS 2.0 and please feel free to leave a response or trackback.