Critical Legislation to Protect Consumers from Harmful Overdraft Practices Passed by House Financial Services Committee

Full House Must Now Pass This Important Bill

WASHINGTON, DC (July 28, 2022) — Today, the U.S. House Committee on Financial Services passed the H.R. 4277, the Overdraft Protection Act. The legislation, introduced by Congresswoman Carolyn Maloney (NY), would enact commonsense limits on overdraft fees, prohibit certain exploitive practices meant to optimize overdraft fee revenue, and establish transparent overdraft practices for all consumers.

The bill enacts limits and protections, many of which consumers have when using other forms of credit, like requiring that overdraft and nonsufficient funds fees be reasonable and proportional to cost. In addition, the bill prohibits certain predatory practices like re-ordering transactions to artificially increase fees.

“We applaud Congresswoman Maloney and the House Financial Services Committee on passing this critical legislation that will protect consumers from abusive overdraft fees,” said Rachel Gittleman, Financial Services Outreach Manager at Consumer Federation of America. “These fees are borne predominately by those who can least afford them and disproportionately fall on low-income consumers and consumers of color. Consumers cannot wait for banks to individually put an end to this practice—the cost is just too high.”

Overdraft fees have become a financial powerhouse for the banks and credit unions that charge them with revenue for overdraft and non-sufficient funds (“NSF”) fees reaching $15.47 billion in 2019. Earlier, the CFPB found that nearly 80% of all overdraft revenue is borne by less than 9% of consumer accounts whose account balances average $350, paying 10 or more overdrafts per year. The average overdraft fee is nearly $35, while the most common transaction to trigger overdrafts are debit card transactions and the average overdraft for those transactions is just $20, according to the Center for Responsible Lending. Although CFA acknowledges and applauds that some banks have made significant changes to their overdraft programs, these measures are insufficient by themselves to make permanent, systemic change.

CFA submitted a statement for the record to the Committee calling for congressional action and joins a broad coalition of consumer, labor, civil and human rights, and religious organizations in support of this legislation.

“We urge the full House to swiftly pass this legislation requiring all banks and credit unions to limit the destructive use of overdraft fees which do far more to hurt consumers than to help,” continued Gittleman.


About The Consumer Federation of America

The Consumer Federation of America is an association of more than 250 nonprofit consumer organizations that was established in 1968 to advance consumer interest through research, advocacy, and education.


Nicholas Rubando
Communications & Membership Outreach Manager
Consumer Federation of America
Cell: 310-849-7573

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