I 

111TH CONGRESS 

1ST SESSION H. R. 1456 

To extend the protections of the Truth in Lending Act to overdraft protection 

programs and services provided by depository institutions, to require 

customer consent before a depository institution may initiate overdraft 

protection services and fees, to enhance the information made available 

to consumers relating to overdraft protection services and fees, to prohibit 

systematic manipulation in the posting of checks and other debits to 

a depository account for the purpose of generating overdraft protection 

fees, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 12, 2009 

Mrs. MALONEY (for herself, Mr. ACKERMAN, Mr. MILLER of North Carolina, 

Mr. ELLISON, Ms. SPEIER, Mr. TIERNEY, and Ms. ESHOO) introduced 

the following bill; which was referred to the Committee on Financial Services 

A BILL 

To extend the protections of the Truth in Lending Act to 

overdraft protection programs and services provided by 

depository institutions, to require customer consent before a depository institution may initiate overdraft protection services and fees, to enhance the information 

made available to consumers relating to overdraft protection services and fees, to prohibit systematic manipulation in the posting of checks and other debits to a 

depository account for the purpose of generating overdraft protection fees, and for other purposes. 


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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Consumer Overdraft 

5 Protection Fair Practices Act’’. 

6 SEC. 2. RESTRICTIONS ON OVERDRAFT PROTECTION PRO7 GRAMS OR SERVICES. 

8 (a) TRUTH IN LENDING ACT AMENDMENTS.— 

9 (1) DEFINITION.—Section 103 of the Truth in 

10 Lending Act (15 U.S.C. 1602) is amended by add11 ing at the end the following new subsection: 

12 ‘‘(cc) TERMS RELATING TO SHORT-TERM EXTEN13 SIONS OF CREDIT UNDER OVERDRAFT PROTECTION PRO14 GRAMS.— 

15 ‘‘(1) OVERDRAFT PROTECTION FEE.—The term 

16 ‘overdraft protection fee’ means any fee or charge 

17 imposed in connection with any account on which 

18 checks or other debits are paid by the institution in 

19 which such account is held even though there are in20 sufficient funds in the account to cover such checks 

21 or other debits, unless such fee or charge— 

22 ‘‘(A) is imposed on an incidental basis as 

23 a customer accommodation and no more than 3 

24 such overdraft fees are imposed during any cal25 endar year; 


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1 ‘‘(B) is imposed in connection with an ex2 tension of credit through an overdraft line of 

3 credit program where such fee or charge was 

4 considered a finance charge under this title, as 

5 in effect immediately prior to the enactment of 

6 the Consumer Overdraft Protection Fair Prac7 tices Act; or 

8 ‘‘(C) has been disclosed in connection with 

9 a program under which the overdraft is covered 

10 by funds transferred from another deposit, 

11 share, or other asset account. 

12 ‘‘(2) OTHER TERMS.— 

13 ‘‘(A) CHECK.—The term ‘check’ has the 

14 same meaning as in section 3(6) of the Check 

15 Clearing for the 21st Century Act. 

16 ‘‘(B) OTHER DEBITS.—The term ‘other 

17 debits’ includes withdrawals from an account by 

18 the consumer through an automated teller ma19 chine and electronic fund transfers from an ac20 count that are initiated or authorized by the 

21 consumer. 

22 ‘‘(C) ELECTRONIC FUND TRANSFER.—The 

23 term ‘electronic fund transfer’ has the same 

24 meaning as in section 903. 


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1 ‘‘(D) ACCOUNT.—The term ‘account’ 

2 means any account intended for use by and 

3 generally used by a consumer primarily for per4 sonal, family, or household purposes into which 

5 the consumer deposits funds. 

6 ‘‘(E) TRANSACTION ACCOUNT.—The term 

7 ‘transaction account’ has the same meaning as 

8 in section 19(b)(1)(C) of the Federal Reserve 

9 Act.’’. 

10 (2) RESTRICTIONS ON OVERDRAFT PROTECTION

11 PROGRAMS OR SERVICES.— 

12 (A) IN GENERAL.—Chapter 2 of the Truth 

13 in Lending Act (15 U.S.C. 1631 et seq.) is 

14 amended by adding at the end the following 

15 new section: 

16 ‘‘§ 140A. Restrictions on overdraft protection pro17 grams or services 

18 ‘‘(a) IN GENERAL.—In the case of any transaction 

19 account of a consumer at any institution, no overdraft pro20 tection fee may be imposed on such account for any exten21 sion of funds by the institution to cover any check or other 

22 debit for which there are insufficient funds in the con23 sumer’s account to pay such check or other debit, unless— 

24 ‘‘(1) the consumer has provided specific written 

25 consent to any program or service that provides for 


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1 charging of such fees in connection with any such 

2 extension of funds; 

3 ‘‘(2) such fee is imposed pursuant to the terms 

4 of a written agreement with the consumer which dis5 closes, in a clear and conspicuous manner— 

6 ‘‘(A) the amount of any fee imposed in 

7 connection with paying an overdraft; 

8 ‘‘(B) any applicable disclosure required by 

9 this title in connection with such extension of 

10 credit, including the disclosures required by sec11 tion 127; 

12 ‘‘(C) the categories of transactions for 

13 which a fee for payment of an overdraft may be 

14 imposed, including whether an overdraft created 

15 by withdrawals at automated teller machines or 

16 other electronic fund transfers will be covered 

17 and a fee imposed; 

18 ‘‘(D) the time period by which the con19 sumer must repay or cover any extension of 

20 credit in the form of payment of an overdraft; 

21 and 

22 ‘‘(E) the circumstances under which the 

23 institution in which an account is held will not 

24 pay an overdraft; and 


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1 ‘‘(F) other information required to be dis2 closed by regulation; 

3 ‘‘(3) such fee is separately and conspicuously 

4 disclosed, each time the fee is imposed, in any peri5 odic statement provided to the consumer with re6 spect to such account and is included in the calcula7 tion of the annual percentage rate as required by 

8 sections 107 and 127(b)(6). 

9 ‘‘(b) CLARIFICATION RELATING TO OVERDRAFT

10 FEES.—In the case of any transaction account of a con11 sumer at any institution, the prohibition against an over12 draft protection fee under subsection (a) shall apply re13 gardless of whether the amount of such fee is the same 

14 as, or less than, any fee imposed by the institution with 

15 respect to such account for a check or other debit that 

16 is returned unpaid. 

17 ‘‘(c) PROHIBITION ON MISREPRESENTATIONS.—If 

18 any institution— 

19 ‘‘(1) will not extend funds under specific cir20 cumstances to cover an overdraft in any transaction 

21 account of a consumer at the institution; or 

22 ‘‘(2) reserves the right to extend funds to pay 

23 any such overdraft on a discretionary basis, 


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1 any representation by such institution that the institution 

2 will extend credit to cover all overdrafts on such account 

3 shall be a violation of this title.’’. 

4 (B) CLERICAL AMENDMENT.—The table of 

5 sections for chapter 2 of the Truth in Lending 

6 Act is amended by inserting after the item re7 lating to section 140 the following new item: 

‘‘140A. Restrictions on overdraft protection programs or services.’’. 

8 (3) RESTRICTIONS ON ADVERTISING OF OVER9 DRAFT PROTECTION PROGRAMS OR SERVICES.— 

10 (A) IN GENERAL.—Chapter 3 of the Truth 

11 in Lending Act (15 U.S.C. 1661 et seq.) is 

12 amended by adding at the end the following 

13 new section: 

14 ‘‘§ 148. Restrictions on advertising of overdraft pro15 tection programs or services 

16 ‘‘(a) IN GENERAL.—In the case of an institution that 

17 maintains transaction accounts for consumers and offers 

18 a program or service under which the institution pays any 

19 overdraft on the account in exchange for payment of an 

20 overdraft protection fee, the institution may not make any 

21 of the following representations or statements with respect 

22 to such program or service in any advertisement or pro23 motion: 

24 ‘‘(1) Any representation or statement describing 

25 a transaction account as free or no cost if the acVerDate Nov 24 2008 22:07 Mar 13, 2009 Jkt 079200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1456.IH H1456

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1 count includes, or is promoted as including, over2 draft protection services that involve the payment of 

3 overdraft protection fees. 

4 ‘‘(2) Any representation or statement encour5 aging use of the account as a service to meet short6 term credit needs or to obtain advances on a con7 sumer’s next payment of salary, wages, benefits, or 

8 other income. 

9 ‘‘(3) Any representation or statement that the 

10 financial institution will honor all checks or other 

11 debits presented against the account, if the institu12 tion retains discretion at any time not to honor any 

13 check or other debit presented. 

14 ‘‘(b) REGULATIONS.—The Board shall prescribe reg15 ulations implementing the restrictions set forth in sub16 section (a) pursuant to the authority of the Board under 

17 section 18(f) of the Federal Trade Commission Act, and 

18 may, by regulation or order, restrict such additional acts 

19 or practices that the Board finds to be unfair or deceptive 

20 in connection with the offering, operation, and advertising 

21 of overdraft protection programs and services.’’. 

22 (B) CLERICAL AMENDMENT.—The table of 

23 sections for chapter 3 of the Truth in Lending 

24 Act is amended by inserting after the item re25 lating to section 147 the following new item: 

‘‘148. Restrictions on advertising of overdraft protection programs or services.’’. 


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1 (4) CLARIFICATION OF FINANCE CHARGE.— 

2 Section 106(a) of the Truth in Lending Act (15 

3 U.S.C. 1605(a)) is amended by adding at the end 

4 the following new paragraph: 

5 ‘‘(7) Overdraft protection fee.’’. 

6 (b) ELECTRONIC FUND TRANSFER ACT AMEND7 MENTS.—Section 904 of the Electronic Fund Transfer 

8 Act (15 U.S.C. 1693b) is amended by adding at the end 

9 the following new subsection: 

10 ‘‘(e) RESTRICTIONS ON OVERDRAFT PROTECTION

11 SERVICES AND FEES.— 

12 ‘‘(1) IN GENERAL.—A financial institution that 

13 holds a consumer’s account may not impose an over14 draft protection fee on the account in connection 

15 with any payment of an electronic fund transfer ini16 tiated by the consumer at an automated teller ma17 chine in spite of a lack of sufficient funds in the 

18 consumer’s account to pay such electronic fund 

19 transfer, unless— 

20 ‘‘(A) the consumer has affirmatively re21 quested such service pursuant to section 

22 140(a)(1), including specific consent to allowing 

23 overdrafts at an automated teller machine or by 

24 debit card at a point-of-sale terminal; 


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1 ‘‘(B) the financial has provided a notice to 

2 the consumer after the transaction is initiated 

3 and before the consumer is irrevocably com4 mitted to completing the transaction, that the 

5 electronic fund transfer the consumer has re6 quested will result in an overdraft protection 

7 fee, together with the amount of any such fee; 

8 ‘‘(C) the consumer elects to continue in the 

9 manner necessary to effect the requested elec10 tronic fund transfer after receiving such notice; 

11 and 

12 ‘‘(D) the overdraft protection fee imposed 

13 in connection with such transaction is clearly 

14 disclosed in the written documentation of the 

15 electronic fund transfer required by section 

16 906(a). 

17 ‘‘(2) PROHIBITION ON FEE IN ABSENCE OF NO18 TICE.—If the notice required by paragraph (1)(B) is 

19 not feasible, the financial institution may not charge 

20 an overdraft protection fee in connection with any 

21 payment of an electronic fund transfer initiated by 

22 the consumer at an automated teller machine or by 

23 debit card at a point-of-sale terminal in spite of a 

24 lack of sufficient funds in the consumer’s account to 

25 pay such electronic fund transfer. 


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1 ‘‘(3) DISCLOSURE OF ACCOUNT BALANCES.—In 

2 the case of any financial institution that offers a 

3 program or service under which the institution pays 

4 any overdraft on a consumer’s account in exchange 

5 for the imposition of an overdraft protection fee in 

6 accordance with paragraph (1), the financial institu7 tion shall, in response to a balance inquiry initiated 

8 by the consumer at an automated teller machine op9 erated by the financial institution, disclose only the 

10 actual dollar balance in the consumer’s account at 

11 the time of the request, which shall not include any 

12 additional amount of credit or overdraft protection 

13 the financial institution will pay under any agree14 ment with the consumer that permits the imposition 

15 of the overdraft protection fee. 

16 ‘‘(4) OVERDRAFT PROTECTION FEE DE17 FINED.—For purposes of this subsection, the term 

18 ‘overdraft protection fee’ has the same meaning as 

19 in section 103(cc)(1).’’. 

20 (c) EXPEDITED FUNDS AVAILABILITY ACT AMEND21 MENTS.— 

22 (1) DEFINITION.—Section 602 of the Expedited 

23 Funds Availability Act (12 U.S.C. 4001) is amended 

24 by adding at the end the following new paragraph: 


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1 ‘‘(26) OVERDRAFT PROTECTION FEE.—The 

2 term ‘overdraft protection fee’ has the same meaning 

3 as in section 103(cc)(1) of the Truth in Lending 

4 Act.’’. 

5 (2) RESTRICTIONS ON OVERDRAFT PROTECTION

6 FEES.—Section 607 of the Expedited Funds Avail7 ability Act (12 U.S.C. 4006) is amended by adding 

8 at the end the following new subsection: 

9 ‘‘(f) RESTRICTIONS ON OVERDRAFT PROTECTION

10 FEES.—A depository institution may not— 

11 ‘‘(1) impose an overdraft protection fee on an 

12 account at such institution for paying any check 

13 drawn on the account in spite of a lack of sufficient 

14 funds in the account to pay such check or any simi15 lar activity unless the accountholder has affirma16 tively requested such service pursuant to section 

17 140(a)(1) of the Truth in Lending Act; or 

18 ‘‘(2) engage in a pattern or practice of delaying 

19 the posting of any deposit in an account, or manipu20 lating the process of posting any check or other 

21 debit against an account, if such pattern or practice 

22 results in 1 or more overdrafts that trigger payment 

23 by the accountholder of an overdraft protection 

24 fee.’’. 

Æ 


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