I 

111TH CONGRESS 

1ST SESSION H. R. 3904 

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 

OCTOBER 22, 2009 

Mrs. MALONEY (for herself, Mr. FRANK of Massachusetts, Ms. WATERS, Mr. 

MAFFEI, Mr. MILLER of North Carolina, Mr. HINOJOSA, Ms. MOORE of 

Wisconsin, Mr. HODES, Mr. CAPUANO, Mr. ACKERMAN, Mr. KANJORSKI, 

Mr. ELLISON, Mr. GUTIERREZ, Ms. SPEIER, Ms. ESHOO, and Mr. 

JONES) 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, 

3 SECTION 1. SHORT TITLE. 

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

5 Act of 2009’’. 


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1 SEC. 2. FINDINGS AND PURPOSE. 

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

3 1601) is amended by adding at the end the following new 

4 subsection: 

5 ‘‘(c) FAIRNESS AND ACCOUNTABILITY IN OVER6 DRAFT COVERAGE.— 

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

8 that— 

9 ‘‘(A) overdraft coverage is a form of short10 term credit that depository institutions provide 

11 for consumer transaction accounts. Historically, 

12 depository institutions covered overdrafts for a 

13 fee on an ad hoc basis; 

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

15 software programs and in consumer use of debit 

16 cards, overdraft coverage for a fee has become 

17 more prevalent; 

18 ‘‘(C) most depository institutions do not 

19 notify consumers when adding this feature to 

20 their transaction accounts, and some do not 

21 permit consumers to eliminate this feature from 

22 such accounts; 

23 ‘‘(D) most depository institutions collect a 

24 high flat fee, including for small dollar trans25 actions, each time the institution covers an 

26 overdraft, in some cases impose multiple overVerDate Nov 24 2008 02:57 Oct 23, 2009 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3904.IH H3904

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1 draft coverage fees within a single day, and 

2 many charge additional fees for each day dur3 ing which the account remains overdrawn; and 

4 ‘‘(E) such abusive and misleading practices 

5 in connection with overdraft coverage fees have 

6 deprived consumers of meaningful choices about 

7 their accounts and placed significant financial 

8 burdens on low- and moderate-income con9 sumers. 

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

11 to protect consumers by limiting abusive and mis12 leading overdraft coverage fees and practices, and by 

13 providing meaningful disclosures and consumer 

14 choice in connection with overdraft coverage fees.’’. 

15 SEC. 3. DEFINITIONS. 

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

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

18 adding at the end the following new subsection: 

19 ‘‘(cc) DEFINITIONS RELATING TO OVERDRAFT COV20 ERAGE.— 

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

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

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

24 other than a travelers check. 


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1 ‘‘(2) DEPOSITORY INSTITUTION.—The term ‘de2 pository institution’ has the same meaning as in 

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

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

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

6 ‘nonsufficient fund fee’ means a fee or charge as7 sessed in connection with an overdraft for which a 

8 depository institution declines payment. 

9 ‘‘(4) OVERDRAFT.—The term ‘overdraft’ means 

10 the amount of a withdrawal by check or other debit 

11 from a transaction account in which there are insuf12 ficient or unavailable funds in the account to cover 

13 such check or debit. 

14 ‘‘(5) OVERDRAFT COVERAGE.—The term ‘over15 draft coverage’ means the payment of a check pre16 sented or other debit posted against a transaction 

17 account by the depository institution in which such 

18 account is held, even though there are insufficient or 

19 unavailable funds in the account to cover such 

20 checks or other debits. 

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

22 ‘overdraft coverage fee’ means any fee or charge as23 sessed in connection with overdraft coverage, or in 

24 connection with any negative account balance that 


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1 results from overdraft coverage, unless such fee or 

2 charge is imposed in connection with— 

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

4 overdraft line of credit program where such fee 

5 or charge was considered a finance charge 

6 under this title as in effect immediately prior to 

7 the enactment of the Overdraft Protection Act 

8 of 2009; or 

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

10 to another transaction account. 

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

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

13 in the calculation of the rate of interest for purposes 

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

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

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

17 term ‘overdraft coverage program’ means a service 

18 under which a depository institution assesses an 

19 overdraft coverage fee for overdraft coverage. 

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

21 ‘transaction account’ has the same meaning as in 

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

23 U.S.C. 461(b)(1)(C)).’’. 

24 (b) CONFORMING AMENDMENT.—Section 

25 107(5)(A)(vi) of the Federal Credit Union Act (12 U.S.C. 


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1 1757(5)(A)(vi)) is amended by inserting ‘‘, other than an 

2 overdraft coverage fee, as defined in section 103(cc) of the 

3 Truth in Lending Act (12 U.S.C. 1602(cc))’’ after ‘‘inclu4 sive of all finance charges’’. 

5 SEC. 4. FAIR MARKETING AND PROVISION OF OVERDRAFT 

6 COVERAGE PROGRAMS. 

7 Chapter 2 of the Truth in Lending Act (15 U.S.C. 

8 1631 et seq.) is amended by adding at the end the fol9 lowing new section: 

10 ‘‘SEC. 140B. OVERDRAFT COVERAGE PROGRAM DISCLO11 SURES AND CONSUMER PROTECTION. 

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

13 engage in acts or practices in connection with the mar14 keting of or the provision of overdraft coverage that are 

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

16 this section. 

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

18 institution that provides or offers to provide overdraft cov19 erage with respect to transaction accounts held at that de20 pository institution shall clearly and conspicuously disclose 

21 in all marketing materials for such overdraft coverage any 

22 overdraft coverage fees. 

23 ‘‘(c) CONSUMER CONSENT OPT-IN.—A depository in24 stitution may charge overdraft coverage fees only if the 

25 consumer has consented in writing, in electronic form, or 


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1 in such other form as is permitted under regulations of 

2 the Board. 

3 ‘‘(d) CONSUMER DISCLOSURES.—Each depository in4 stitution shall clearly disclose to each consumer covered 

5 by an overdraft protection program of that depository in6 stitution— 

7 ‘‘(1) that— 

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

9 more than one overdraft coverage fee in any 

10 single calendar month and not more than 6 

11 overdraft coverage fees in any single calendar 

12 year, per transaction account; and 

13 ‘‘(B) the depository institution retains the 

14 discretion to pay (without assessing an over15 draft coverage fee) or reject overdrafts incurred 

16 by the consumer beyond the numbers described 

17 in subparagraph (A); 

18 ‘‘(2) information about any alternative over19 draft products that are available, including a clear 

20 explanation of how the terms and fees for such alter21 native services and products differ; and 

22 ‘‘(3) such other information as the Board may 

23 require, by rule. 

24 ‘‘(e) PERIODIC STATEMENTS.—Each depository insti25 tution that offers an overdraft coverage program shall, in 


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1 each periodic statement for any transaction account that 

2 has an overdraft coverage program feature, clearly disclose 

3 to the consumer the dollar amount of all overdraft cov4 erage fees charged to the consumer for the relevant period 

5 and year to date. 

6 ‘‘(f) EXCLUSION FROM ACCOUNT BALANCE INFOR7 MATION.—No depository institution may include the 

8 amount available under the overdraft coverage program of 

9 a consumer as part of the transaction account balance of 

10 that consumer. 

11 ‘‘(g) PROMPT NOTIFICATION.—Each depository insti12 tution shall promptly notify consumers, through a reason13 able means selected by the consumer, when overdraft cov14 erage has been accessed with respect to the account of 

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

16 access occurs, including— 

17 ‘‘(1) the date of the transaction; 

18 ‘‘(2) the type of transaction; 

19 ‘‘(3) the overdraft amount; 

20 ‘‘(4) the overdraft coverage fee; 

21 ‘‘(5) the amount necessary to return the ac22 count to a positive balance; and 

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

24 an overdraft coverage program will be terminated if 


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1 the account is not returned to a positive balance 

2 within a given time period. 

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

4 Each depository institution shall provide prompt notice to 

5 the consumer, using a reasonable means selected by the 

6 consumer, if the institution terminates or suspends access 

7 to an overdraft coverage program with respect to an ac8 count of the consumer, including a clear rationale for the 

9 action. 

10 ‘‘(i) NOTICE AND OPPORTUNITY TO CANCEL.—Each 

11 depository institution shall— 

12 ‘‘(1) warn any consumer covered by an over13 draft coverage program who engages in a trans14 action through an automated teller machine or a 

15 branch teller if completing the transaction would 

16 trigger overdraft coverage fees, including the amount 

17 of the fees; and 

18 ‘‘(2) provide to the consumer the opportunity to 

19 cancel the transaction before it is completed. 

20 ‘‘(j) OVERDRAFT COVERAGE FEE LIMITS.— 

21 ‘‘(1) FREQUENCY.—A depository institution 

22 may charge not more than one overdraft coverage 

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

24 6 overdraft coverage fees in any single calendar 

25 year, per transaction account. 


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1 ‘‘(2) REASONABLE AND PROPORTIONAL OVER2 DRAFT COVERAGE FEES.— 

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

4 overdraft coverage fee that a depository institu5 tion may assess for paying a transaction (in6 cluding a check or other debit) shall be reason7 able and proportional to the cost of processing 

8 the transaction. 

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

10 The Board, in consultation with the Comp11 troller of the Currency, the Board of Directors 

12 of the Federal Deposit Insurance Corporation, 

13 the Director of the Office of Thrift Supervision, 

14 and the National Credit Union Administration 

15 Board, may issue rules to provide an amount 

16 for any overdraft coverage fee that is presumed 

17 to be reasonable and proportional to the actual 

18 cost of processing the transaction. 

19 ‘‘(3) POSTING ORDER.—In order to minimize 

20 overdraft coverage fees charged to consumers, each 

21 depository institution shall post transactions with re22 spect to transaction accounts in such a manner that 

23 the consumer does not incur avoidable overdraft cov24 erage fees. 


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1 ‘‘(k) DEBIT HOLDS.—No depository institution may 

2 charge an overdraft coverage fee on any category of trans3 action, if the overdraft results solely from a debit hold 

4 amount placed on a transaction account that exceeds the 

5 actual dollar amount of the transaction. 

6 ‘‘(l) NONDISCRIMINATION FOR NOT OPTING IN.—In 

7 implementing the requirements of this section, each depos8 itory institution shall provide to consumers who have not 

9 consented to participate in an overdraft coverage program, 

10 transaction accounts having the same terms, conditions, 

11 or other features as those that are provided to consumers 

12 who have consented to participate in such overdraft cov13 erage program, except for features of such overdraft cov14 erage. 

15 ‘‘(m) NONSUFFICIENT FUND FEE LIMITS.—No de16 pository institution may charge any nonsufficient fund fee 

17 with respect to— 

18 ‘‘(1) any transaction at an automated teller ma19 chine; or 

20 ‘‘(2) any debit card transaction. 

21 ‘‘(n) REPORTS TO CONSUMER REPORTING AGEN22 CIES.—No depository institution may report negative in23 formation regarding the use of overdraft coverage by a 

24 consumer to any consumer reporting agency (as that term 

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


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1 (15 U.S.C. 1681a)) when the overdraft amounts and over2 draft coverage fees are paid under the terms of an over3 draft coverage program. 

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

5 section may be construed as prohibiting a depository insti6 tution from retaining the discretion to pay, without assess7 ing an overdraft coverage fee or charge, an overdraft in8 curred by a consumer.’’. 

9 SEC. 5. REGULATORY AUTHORITY OF THE BOARD. 

10 (a) IN GENERAL.—Not later than 9 months after the 

11 date of the enactment of this Act (except as provided in 

12 subsection (b)), the Board of Governors of the Federal Re13 serve System (hereafter in this Act referred to as the 

14 ‘‘Board’’), in consultation with the Comptroller of the Cur15 rency, the Board of Directors of the Federal Deposit In16 surance Corporation, the Director of the Office of Thrift 

17 Supervision, and the National Credit Union Administra18 tion Board, shall issue such final rules and publish such 

19 model forms as necessary to carry out section 140B of 

20 the Truth in Lending Act, as added by this Act. 

21 (b) BOARD AUTHORITY REGARDING ADDITIONAL

22 WARNINGS.—The Board may, by rule, after taking into 

23 account the findings of the Comptroller General of the 

24 United States under section 6, require warnings at loca25 tions such as point-of-sale transfer terminals or other locaVerDate Nov 24 2008 02:57 Oct 23, 2009 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H3904.IH H3904

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1 tions, that are similar to those required under section 

2 140B(i) of the Truth in Lending Act, as added by this 

3 Act, where feasible, and if the cost of providing such warn4 ings does not outweigh the benefit to consumers. 

5 SEC. 6. STUDY AND REPORT BY THE GAO. 

6 (a) STUDY.— 

7 (1) IN GENERAL.—The Comptroller General of 

8 the United States shall conduct a study regarding 

9 whether it is feasible for a depository institution— 

10 (A) to provide a warning to a consumer at 

11 a point-of-sale transfer terminal that com12 pleting a transfer may trigger overdraft cov13 erage fees; and 

14 (B) to provide the consumer with the op15 portunity to cancel the point-of-sale transfer be16 fore the transaction is completed. 

17 (2) CONSIDERATIONS.—In conducting the study 

18 under this subsection, the Comptroller General shall 

19 evaluate— 

20 (A) the benefits to consumers of a point21 of-sale transfer overdraft warning and oppor22 tunity to cancel; 

23 (B) the availability of technology to pro24 vide such a warning and opportunity; and 


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1 (C) the cost of providing such warning and 

2 opportunity. 

3 (b) REPORT TO CONGRESS.—Not later than 1 year 

4 after the date of enactment of this Act, the Comptroller 

5 General shall submit a report to Congress on the results 

6 of the study conducted under subsection (a). 

7 (c) DEFINITIONS.—As used in this section, the terms 

8 ‘‘overdraft coverage program’’, ‘‘overdraft coverage fee’’, 

9 and ‘‘depository institution’’ have the same meanings as 

10 in section 103(cc) of the Truth in Lending Act, as added 

11 by this Act. 

12 SEC. 7. EFFECTIVE DATE. 

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

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

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

16 the Board under this Act or such amendments are pre17 scribed in final form. 

18 (b) MORATORIUM ON FEE INCREASES.— 

19 (1) IN GENERAL.—During the 1-year period be20 ginning on the date of the enactment of this Act, no 

21 depository institution may increase the overdraft 

22 coverage fees or charges assessed on transaction ac23 counts for paying a transaction (including a check or 

24 other debit) in connection with an overdraft or for 

25 nonsufficient funds. 


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

2 terms ‘‘depository institution’’, ‘‘overdraft’’, ‘‘over3 draft coverage fee’’, ‘‘transaction account’’ and 

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

5 in section 103(cc) of the Truth in Lending Act, as 

6 added by this Act. 

Æ 


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