I 

112TH CONGRESS 

2D SESSION H. R. 5691 

To amend the Truth in Lending Act to establish fair and transparent practices related to the marketing and provision of overdraft coverage programs at depository institutions, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 9, 2012 

Mrs. MALONEY (for herself, Mr. FRANK of Massachusetts, Mr. CAPUANO, Mr. 

ELLISON, Mr. GUTIERREZ, Mr. MORAN, Mr. JACKSON of Illinois, Ms. 

RICHARDSON, Mr. VAN HOLLEN, Mr. SERRANO, Mr. CICILLINE, Mr. 

DINGELL, Mr. MILLER of North Carolina, Mr. RANGEL, Ms. CHU, Ms. 

SCHAKOWSKY, Mr. GRIJALVA, Mr. BLUMENAUER, Mr. CARSON of Indiana, Ms. HAHN, Ms. KAPTUR, Mr. NADLER, Mr. CONYERS, Mr. THOMPSON of Mississippi, Ms. BROWN of Florida, Mr. CUMMINGS, Ms. ESHOO, 

Mr. GONZALEZ, Ms. NORTON, Ms. LEE of California, Ms. DELAURO, Ms. 

WILSON of Florida, Ms. LORETTA SANCHEZ of California, Ms. WOOLSEY, 

Mrs. LOWEY, Mr. TOWNS, Ms. WATERS, Mr. TONKO, Mr. RUSH, Mr. 

ACKERMAN, Mr. HINCHEY, Mr. STARK, Mr. HOLT, Mr. PALLONE, Ms. 

TSONGAS, Mr. BECERRA, and Ms. BASS of California) introduced the following bill; which was referred to the Committee on Financial Services 

A BILL 

To amend the Truth in Lending Act to establish fair and 

transparent practices related to the marketing and provision of overdraft coverage programs at depository institutions, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Overdraft Protection 

3 Act of 2012’’. 

4 SEC. 2. FINDINGS AND PURPOSE. 

5 Section 102 of the Truth in Lending Act (15 U.S.C. 

6 1601) is amended by adding at the end the following new 

7 subsection: 

8 ‘‘(c) FAIRNESS AND ACCOUNTABILITY IN OVER9 DRAFT COVERAGE.— 

10 ‘‘(1) FINDINGS.—The Congress also finds 

11 that— 

12 ‘‘(A) overdraft coverage is a form of short13 term credit that depository institutions provide 

14 for consumer transaction accounts. Historically, 

15 depository institutions covered overdrafts for a 

16 fee on an ad hoc basis; 

17 ‘‘(B) with the growth in specially designed 

18 software programs and in consumer use of debit 

19 cards, overdraft coverage for a fee has become 

20 more prevalent; 

21 ‘‘(C) many depository institutions offer a 

22 range of overdraft options but aggressively en23 courage consumers to consent to the most ex24 pensive option, where a high flat fee is collected 

25 for every individual overdraft transaction; 


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1 ‘‘(D) most depository institutions collect a 

2 high flat fee, including for small dollar trans3 actions, each time the institution covers an 

4 overdraft, in some cases impose multiple over5 draft coverage fees within a single day, and 

6 many charge additional fees for each day dur7 ing which the account remains overdrawn; and 

8 ‘‘(E) such abusive practices in connection 

9 with overdraft coverage fees have deprived con10 sumers of meaningful choices about their ac11 counts and placed significant financial burdens 

12 on low- and moderate-income consumers. 

13 ‘‘(2) PURPOSE.—It is the purpose of this title 

14 to protect consumers by limiting abusive overdraft 

15 coverage fees and practices, and by providing mean16 ingful disclosures and consumer choice in connection 

17 with overdraft coverage fees.’’. 

18 SEC. 3. DEFINITIONS. 

19 (a) ADDITIONAL DEFINITIONS.—Section 103 of the 

20 Truth in Lending Act (15 U.S.C. 1602) is amended by 

21 adding at the end the following new subsection: 

22 ‘‘(ee) DEFINITIONS RELATING TO OVERDRAFT COV23 ERAGE.— 

24 ‘‘(1) CHECK.—The term ‘check’ has the same 

25 meaning as in section 3(6) of the Check Clearing for 


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1 the 21st Century Act (12 U.S.C. 5001 et seq.), 

2 other than a travelers check. 

3 ‘‘(2) DEPOSITORY INSTITUTION.—The term ‘de4 pository institution’ has the same meaning as in 

5 clauses (i) through (vi) of section 19(b)(1)(A) of the 

6 Federal Reserve Act (12 U.S.C. 461(b)(1)(A)). 

7 ‘‘(3) NONSUFFICIENT FUND FEE.—The term 

8 ‘nonsufficient fund fee’ means a fee or charge as9 sessed in connection with an overdraft for which a 

10 depository institution declines payment. 

11 ‘‘(4) OVERDRAFT.—The term ‘overdraft’ 

12 means, in a withdrawal by check or other debit from 

13 a transaction account in which there are insufficient 

14 or unavailable funds in the account to cover such 

15 check or debit, the amount of such withdrawal that 

16 exceeds the available funds in the account. 

17 ‘‘(5) OVERDRAFT COVERAGE.—The term ‘over18 draft coverage’ means the payment of a check pre19 sented or other debit posted against a transaction 

20 account by the depository institution in which such 

21 account is held, even though there are insufficient or 

22 unavailable funds in the account to cover such 

23 checks or other debits. 

24 ‘‘(6) OVERDRAFT COVERAGE FEE.—The term 

25 ‘overdraft coverage fee’ means any fee or charge asVerDate Mar 15 2010 02:49 May 12, 2012 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5691.IH H5691

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1 sessed in connection with overdraft coverage, or in 

2 connection with any negative account balance that 

3 results from overdraft coverage, unless such fee or 

4 charge is imposed in connection with— 

5 ‘‘(A) an extension of credit through an 

6 overdraft line of credit program where such fee 

7 or charge was considered a finance charge 

8 under this title as in effect immediately prior to 

9 the enactment of the Overdraft Protection Act 

10 of 2012; or 

11 ‘‘(B) any transfer from an account linked 

12 to another transaction account. 

13 Such fee shall be considered a ‘finance charge’ for 

14 purposes of section 106(a), but shall not be included 

15 in the calculation of the rate of interest for purposes 

16 of section 107(5)(A)(vi) of the Federal Credit Union 

17 Act (12 U.S.C. 1757(5)(A)(vi)). 

18 ‘‘(7) OVERDRAFT COVERAGE PROGRAM.—The 

19 term ‘overdraft coverage program’ means a service 

20 under which a depository institution assesses an 

21 overdraft coverage fee for overdraft coverage. 

22 ‘‘(8) TRANSACTION ACCOUNT.—The term 

23 ‘transaction account’ has the same meaning as in 

24 section 19(b)(1)(C) of the Federal Reserve Act (12 

25 U.S.C. 461(b)(1)(C)).’’. 


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1 (b) CONFORMING AMENDMENT.—Section 

2 107(5)(A)(vi) of the Federal Credit Union Act (12 U.S.C. 

3 1757(5)(A)(vi)) is amended by inserting ‘‘, other than an 

4 overdraft coverage fee, as defined in section 103(ee) of the 

5 Truth in Lending Act (12 U.S.C. 1602(ee))’’ after ‘‘inclu6 sive of all finance charges’’. 

7 SEC. 4. FAIR MARKETING AND PROVISION OF OVERDRAFT 

8 COVERAGE PROGRAMS. 

9 (a) IN GENERAL.—Chapter 2 of the Truth in Lend10 ing Act (15 U.S.C. 1631 et seq.) is amended by adding 

11 at the end the following new section: 

12 ‘‘§ 140B. Overdraft coverage program disclosures and 

13 consumer protection 

14 ‘‘(a) PROHIBITIONS.—No depository institution may 

15 engage in acts or practices in connection with the mar16 keting of or the provision of overdraft coverage that are 

17 unfair, deceptive, or designed to evade the provisions of 

18 this section. 

19 ‘‘(b) MARKETING DISCLOSURES.—Each depository 

20 institution that provides or offers to provide overdraft cov21 erage with respect to transaction accounts held at that de22 pository institution shall clearly and conspicuously disclose 

23 in all marketing materials for such overdraft coverage— 

24 ‘‘(1) any overdraft coverage fees with respect to 

25 such overdraft coverage; and 


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1 ‘‘(2) that by not opting-in to such overdraft 

2 coverage— 

3 ‘‘(A) a consumer’s transaction may be de4 clined if there are insufficient funds in the re5 lated transaction account; and 

6 ‘‘(B) the consumer will not be charged a 

7 fee if such transaction is declined. 

8 ‘‘(c) CONSUMER CONSENT OPT-IN.—A depository in9 stitution may charge overdraft coverage fees with respect 

10 to the use of an automatic teller machine or point of sale 

11 transaction only if the consumer has consented in writing, 

12 in electronic form, or in such other form as is permitted 

13 under regulations of the Bureau. 

14 ‘‘(d) CONSUMER DISCLOSURES.—Each depository in15 stitution shall clearly disclose to each consumer covered 

16 by an overdraft protection program of that depository in17 stitution— 

18 ‘‘(1) that— 

19 ‘‘(A) the consumer may be charged for not 

20 more than one overdraft coverage fee in any 

21 single calendar month and not more than 6 

22 overdraft coverage fees in any single calendar 

23 year, per transaction account; and 

24 ‘‘(B) the depository institution retains the 

25 discretion to pay (without assessing an overVerDate Mar 15 2010 02:49 May 12, 2012 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H5691.IH H5691

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1 draft coverage fee) or reject overdrafts incurred 

2 by the consumer beyond the numbers described 

3 in subparagraph (A); 

4 ‘‘(2) the overdraft coverage fee as an annual 

5 percentage rate, so as to permit consumers to mean6 ingfully compare the overdraft coverage to alter7 native forms of overdraft options and other sources 

8 of credit; 

9 ‘‘(3) information about any alternative over10 draft products that are available (such as linked ac11 counts, lines of credit, and alerts), including a clear 

12 explanation of how the terms and fees for such alter13 native services and products differ; and 

14 ‘‘(4) such other information as the Bureau may 

15 require, by rule. 

16 ‘‘(e) PERIODIC STATEMENTS.—Each depository insti17 tution that offers an overdraft coverage program shall, in 

18 each periodic statement for any transaction account that 

19 has an overdraft coverage program feature, clearly disclose 

20 to the consumer the dollar amount of all overdraft cov21 erage fees and nonsufficient fund fees charged to the con22 sumer for the relevant period and year to date. 

23 ‘‘(f) EXCLUSION FROM ACCOUNT BALANCE INFOR24 MATION.—No depository institution may include the 

25 amount available under the overdraft coverage program of 


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1 a consumer as part of the transaction account balance of 

2 that consumer. 

3 ‘‘(g) PROMPT NOTIFICATION.—Each depository insti4 tution shall promptly notify consumers, through a reason5 able means selected by the consumer, when overdraft cov6 erage has been accessed with respect to the account of 

7 the consumer, not later than on the day on which such 

8 access occurs, including— 

9 ‘‘(1) the date of the transaction; 

10 ‘‘(2) the type of transaction; 

11 ‘‘(3) the overdraft amount; 

12 ‘‘(4) the overdraft coverage fee; 

13 ‘‘(5) the amount necessary to return the ac14 count to a positive balance; and 

15 ‘‘(6) whether the participation of a consumer in 

16 an overdraft coverage program will be terminated if 

17 the account is not returned to a positive balance 

18 within a given time period. 

19 ‘‘(h) TERMINATED OR SUSPENDED COVERAGE.— 

20 Each depository institution shall provide prompt notice to 

21 the consumer, using a reasonable means selected by the 

22 consumer, if the institution terminates or suspends access 

23 to an overdraft coverage program with respect to an ac24 count of the consumer, including a clear rationale for the 

25 action. 


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1 ‘‘(i) OVERDRAFT COVERAGE FEE LIMITS.— 

2 ‘‘(1) NOTICE AND OPPORTUNITY TO CANCEL.— 

3 Each depository institution shall— 

4 ‘‘(A) warn any consumer covered by an 

5 overdraft coverage program who engages in a 

6 transaction through an automated teller ma7 chine or a branch teller if completing the trans8 action would trigger overdraft coverage fees, in9 cluding the amount of the fees; and 

10 ‘‘(B) provide to the consumer the oppor11 tunity to cancel the transaction before it is 

12 completed. 

13 ‘‘(2) FREQUENCY.—A depository institution 

14 may charge not more than one overdraft coverage 

15 fee in any single calendar month, and not more than 

16 6 overdraft coverage fees in any single calendar 

17 year, per transaction account. 

18 ‘‘(3) REASONABLE AND PROPORTIONAL OVER19 DRAFT COVERAGE FEES.— 

20 ‘‘(A) IN GENERAL.—The amount of any 

21 overdraft coverage fee that a depository institu22 tion may assess for paying a transaction (in23 cluding a check or other debit) shall be reason24 able and proportional to the amount of the 

25 overdraft. 


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1 ‘‘(B) SAFE HARBOR RULE AUTHORIZED.— 

2 The Bureau, in consultation with the Board of 

3 Governors of the Federal Reserve System, 

4 Comptroller of the Currency, the Board of Di5 rectors of the Federal Deposit Insurance Cor6 poration, and the National Credit Union Ad7 ministration Board, may issue rules to provide 

8 an amount for any overdraft coverage fee that 

9 is presumed to be reasonable and proportional 

10 the amount of the overdraft. 

11 ‘‘(4) POSTING ORDER.—In order to minimize 

12 overdraft coverage fees charged to consumers, each 

13 depository institution shall post transactions with re14 spect to transaction accounts in such a manner that 

15 the consumer does not incur avoidable overdraft cov16 erage fees. 

17 ‘‘(j) DEBIT HOLDS.—No depository institution may 

18 charge an overdraft coverage fee on any category of trans19 action, if the overdraft results solely from a debit hold 

20 amount placed on a transaction account that exceeds the 

21 actual dollar amount of the transaction. 

22 ‘‘(k) NONDISCRIMINATION FOR NOT OPTING IN.—In 

23 implementing the requirements of this section, each depos24 itory institution shall provide to consumers who have not 

25 consented to participate in an overdraft coverage program, 


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1 transaction accounts having the same terms, conditions, 

2 or other features as those that are provided to consumers 

3 who have consented to participate in such overdraft cov4 erage program, except for features of such overdraft cov5 erage. 

6 ‘‘(l) NONSUFFICIENT FUND FEE LIMITS.—No depos7 itory institution may charge any nonsufficient fund fee 

8 with respect to— 

9 ‘‘(1) any transaction at an automated teller ma10 chine; or 

11 ‘‘(2) any debit card transaction. 

12 ‘‘(m) REPORTS TO CONSUMER REPORTING AGEN13 CIES.—No depository institution may report negative in14 formation regarding the use of overdraft coverage by a 

15 consumer to any consumer reporting agency (as that term 

16 is defined in section 603 of the Fair Credit Reporting Act 

17 (15 U.S.C. 1681a)) when the overdraft amounts and over18 draft coverage fees are repaid under the terms of an over19 draft coverage program. 

20 ‘‘(n) PREPAID CARD STUDY AND RULEMAKING.— 

21 ‘‘(1) STUDY.— 

22 ‘‘(A) IN GENERAL.—The Bureau shall 

23 carry out a study on whether consumers are 

24 being subjected to abusive practices with re25 spect to prepaid card overdraft coverage. 


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1 ‘‘(B) REPORT.—Not later than 1 year 

2 after the date of the enactment of this section, 

3 the Bureau shall issue a report to the Congress 

4 on all findings and determinations made in car5 rying out the study required under subpara6 graph (A). 

7 ‘‘(2) RULEMAKING.—If the Bureau, in carrying 

8 out the study required under paragraph (1)(A), de9 termines that consumers are being subjected to abu10 sive practices with respect to prepaid card overdraft 

11 coverage, the Bureau may, to the extent the Bureau 

12 determines appropriate, apply the provisions of this 

13 section to prepaid card overdraft coverage to the 

14 same extent such provisions apply to overdraft cov15 erage offered by depository institutions. 

16 ‘‘(3) DEFINITIONS.—For purpose of this sec17 tion: 

18 ‘‘(A) PREPAID CARD.—The term ‘prepaid 

19 card’ has the meaning given the term general20 use prepaid card under section 915(a)(2)(A) of 

21 the Electronic Fund Transfer Act. 

22 ‘‘(B) PREPAID CARD OVERDRAFT COV23 ERAGE.—The term ‘prepaid card overdraft cov24 erage’ means the payment of a charge posted 

25 against a prepaid card— 


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1 ‘‘(i) where the prepaid card has insuf2 ficient or unavailable funds with which to 

3 cover such payment; and 

4 ‘‘(ii) where a fee or other charge is as5 sessed against the consumer in connection 

6 with such payment. 

7 ‘‘(o) RULE OF CONSTRUCTION.—No provision of this 

8 section may be construed as prohibiting a depository insti9 tution from retaining the discretion to pay, without assess10 ing an overdraft coverage fee or charge, an overdraft in11 curred by a consumer.’’. 

12 (b) TECHNICAL AMENDMENT.—The table of contents 

13 for chapter II of the Truth in Lending Act is amended 

14 by inserting after the item relating to section 140A the 

15 following new item: 

‘‘140B. Overdraft coverage program disclosures and consumer protection.’’. 

16 SEC. 5. REGULATORY AUTHORITY OF THE BUREAU. 

17 Not later than 24 months after the date of the enact18 ment of this Act, the Bureau of Consumer Financial Pro19 tection (hereafter in this Act referred to as the ‘‘Bureau’’) 

20 shall issue such final rules and publish such model forms 

21 as necessary to carry out section 140B of the Truth in 

22 Lending Act, as added by this Act. 

23 SEC. 6. EFFECTIVE DATE. 

24 (a) IN GENERAL.—This Act and the amendments 

25 made by this Act shall take effect 1 year after the date 


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1 of the enactment of this Act, whether or not the rules of 

2 the Bureau under this Act or such amendments are pre3 scribed in final form. 

4 (b) PREPAID CARD STUDY TO BEGIN ON ENACT5 MENT.—Notwithstanding subsection (a), section 

6 140B(n)(1) of the Truth in Lending Act (as added by sec7 tion 4(a)) shall take effect upon enactment of this Act. 

8 (c) MORATORIUM ON FEE INCREASES.— 

9 (1) IN GENERAL.—During the 1-year period be10 ginning on the date of the enactment of this Act, no 

11 depository institution may increase the overdraft 

12 coverage fees or charges assessed on transaction ac13 counts for paying a transaction (including a check or 

14 other debit) in connection with an overdraft or for 

15 nonsufficient funds. 

16 (2) DEFINITIONS.—As used in this section, the 

17 terms ‘‘depository institution’’, ‘‘overdraft’’, ‘‘over18 draft coverage fee’’, ‘‘transaction account’’ and 

19 ‘‘nonsufficient fund fee’’ have the same meanings as 

20 in section 103(ee) of the Truth in Lending Act, as 

21 added by this Act. 

Æ 


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