I 

114TH CONGRESS 

2D SESSION H. R. 5198 

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 11, 2016 

Mrs. CAROLYN B. MALONEY of New York (for herself, Mr. BLUMENAUER, Ms. 

JUDY CHU of California, Mr. ISRAEL, Mrs. LOWEY, Mr. MCGOVERN, Ms. 

NORTON, Mr. RYAN of Ohio, Ms. SCHAKOWSKY, Mr. SERRANO, Ms. 

SLAUGHTER, Ms. TSONGAS, Mr. SHERMAN, Mr. CAPUANO, Ms. MOORE, 

Mr. ELLISON, and Mr. FOSTER) 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 2016’’. 


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1 SEC. 2. FINDINGS AND PURPOSE. 

2 (a) FINDINGS.—The Congress finds the following: 

3 (1) Overdraft coverage is a form of short-term 

4 credit that depository institutions provide for con5 sumer transaction accounts. Historically, depository 

6 institutions covered overdrafts for a fee on an ad hoc 

7 basis. 

8 (2) With the growth in specially designed soft9 ware programs and in consumer use of debit cards, 

10 overdraft coverage for a fee has become more preva11 lent. 

12 (3) Many depository institutions offer a range 

13 of overdraft options but aggressively encourage con14 sumers to consent to the most expensive option, 

15 where a high flat fee is collected for every individual 

16 overdraft transaction. 

17 (4) Most depository institutions collect a high 

18 flat fee, including for small dollar transactions, each 

19 time the institution covers an overdraft, in some 

20 cases impose multiple overdraft coverage fees within 

21 a single day, and many charge additional fees for 

22 each day during which the account remains over23 drawn. 

24 (5) Such abusive practices in connection with 

25 overdraft coverage fees have deprived consumers of 

26 meaningful choices about their accounts and placed 


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1 significant financial burdens on low- and moderate2 income consumers. 

3 (b) PURPOSE.—It is the purpose of this Act to pro4 tect consumers by limiting abusive overdraft coverage fees 

5 and practices, and by providing meaningful disclosures 

6 and consumer choice in connection with overdraft coverage 

7 fees. 

8 SEC. 3. DEFINITIONS. 

9 (a) ADDITIONAL DEFINITIONS.—Section 140B of the 

10 Truth in Lending Act, as added by section 4, is amended 

11 by adding at the end the following new subsection: 

12 ‘‘(o) DEFINITIONS RELATING TO OVERDRAFT COV13 ERAGE.—For purposes of this section: 

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

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

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

17 other than a travelers check. 

18 ‘‘(2) DEPOSITORY INSTITUTION.—The term ‘de19 pository institution’ has the same meaning as in 

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

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

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

23 ‘nonsufficient fund fee’ means a fee or charge as24 sessed in connection with an overdraft for which a 

25 depository institution declines payment. 


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

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

3 a consumer transaction account in which there are 

4 insufficient or unavailable funds in the account to 

5 cover such check or debit, the amount of such with6 drawal that exceeds the available funds in the ac7 count. 

8 ‘‘(5) OVERDRAFT COVERAGE.—The term ‘over9 draft coverage’ means the payment of a check pre10 sented or other debit posted against a consumer 

11 transaction account by the depository institution in 

12 which such account is held, even though there are 

13 insufficient or unavailable funds in the account to 

14 cover such checks or other debits. 

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

16 ‘overdraft coverage fee’ means any fee or charge as17 sessed in connection with overdraft coverage, or in 

18 connection with any negative account balance that 

19 results from overdraft coverage, unless such fee or 

20 charge is imposed in connection with— 

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

22 overdraft line of credit program where such fee 

23 or charge was considered a finance charge 

24 under this title as in effect immediately prior to 


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1 the enactment of the Overdraft Protection Act 

2 of 2012; or 

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

4 to another transaction account. 

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

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

7 in the calculation of the rate of interest for purposes 

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

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

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

11 term ‘overdraft coverage program’ means a service 

12 under which a depository institution assesses an 

13 overdraft coverage fee for overdraft coverage. 

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

15 ‘transaction account’ has the same meaning as in 

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

17 U.S.C. 461(b)(1)(C)).’’. 

18 (b) CONFORMING AMENDMENT.—Section 

19 107(5)(A)(vi) of the Federal Credit Union Act (12 U.S.C. 

20 1757(5)(A)(vi)) is amended by inserting ‘‘, other than an 

21 overdraft coverage fee, as defined in section 140B(o) of 

22 the Truth in Lending Act’’ after ‘‘inclusive of all finance 

23 charges’’. 


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1 SEC. 4. FAIR MARKETING AND PROVISION OF OVERDRAFT 

2 COVERAGE PROGRAMS. 

3 (a) IN GENERAL.—Chapter 2 of the Truth in Lend4 ing Act (15 U.S.C. 1631 et seq.) is amended by adding 

5 at the end the following new section: 

6 ‘‘§ 140B. Overdraft coverage program disclosures and 

7 consumer protection 

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

9 engage in acts or practices in connection with the mar10 keting of or the provision of overdraft coverage that are 

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

12 this section. 

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

14 institution that provides or offers to provide overdraft cov15 erage with respect to transaction accounts held at that de16 pository institution shall clearly and conspicuously disclose 

17 in all marketing materials for such overdraft coverage— 

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

19 such overdraft coverage; and 

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

21 coverage— 

22 ‘‘(A) a consumer’s transaction may be de23 clined if there are insufficient funds in the re24 lated transaction account; and 

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

26 fee if such transaction is declined. 


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1 ‘‘(c) CONSUMER CONSENT OPT-IN.—A depository in2 stitution may charge overdraft coverage fees with respect 

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

4 transaction only if the consumer has consented in writing, 

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

6 under regulations of the Bureau. 

7 ‘‘(d) CONSUMER DISCLOSURES.—Each depository in8 stitution shall clearly disclose to each consumer covered 

9 by an overdraft protection program of that depository in10 stitution— 

11 ‘‘(1) that— 

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

13 more than one overdraft coverage fee in any 

14 single calendar month and not more than 6 

15 overdraft coverage fees in any single calendar 

16 year, per transaction account; and 

17 ‘‘(B) the depository institution retains the 

18 discretion to pay (without assessing an over19 draft coverage fee) or reject overdrafts incurred 

20 by the consumer beyond the numbers described 

21 in subparagraph (A); 

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

23 percentage rate, so as to permit consumers to mean24 ingfully compare the overdraft coverage to alterVerDate Sep 11 2014 02:27 May 14, 2016 Jkt 059200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H5198.IH H5198

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1 native forms of overdraft options and other sources 

2 of credit; 

3 ‘‘(3) information about any alternative over4 draft products that are available (such as linked ac5 counts, lines of credit, and alerts), including a clear 

6 explanation of how the terms and fees for such alter7 native services and products differ; and 

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

9 require, by rule. 

10 ‘‘(e) PERIODIC STATEMENTS.—Each depository insti11 tution that offers an overdraft coverage program shall, in 

12 each periodic statement for any transaction account that 

13 has an overdraft coverage program feature, clearly disclose 

14 to the consumer the dollar amount of all overdraft cov15 erage fees and nonsufficient fund fees charged to the con16 sumer for the relevant period and year to date. 

17 ‘‘(f) EXCLUSION FROM ACCOUNT BALANCE INFOR18 MATION.—No depository institution may include the 

19 amount available under the overdraft coverage program of 

20 a consumer as part of the transaction account balance of 

21 that consumer. 

22 ‘‘(g) PROMPT NOTIFICATION.—Each depository insti23 tution shall promptly notify consumers, through a reason24 able means selected by the consumer, when overdraft cov25 erage has been accessed with respect to the account of 


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

2 access occurs, including— 

3 ‘‘(1) the date of the transaction; 

4 ‘‘(2) the type of transaction; 

5 ‘‘(3) the overdraft amount; 

6 ‘‘(4) the overdraft coverage fee; 

7 ‘‘(5) the amount necessary to return the ac8 count to a positive balance; and 

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

10 an overdraft coverage program will be terminated if 

11 the account is not returned to a positive balance 

12 within a given time period. 

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

14 Each depository institution shall provide prompt notice to 

15 the consumer, using a reasonable means selected by the 

16 consumer, if the institution terminates or suspends access 

17 to an overdraft coverage program with respect to an ac18 count of the consumer, including a clear rationale for the 

19 action. 

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

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

22 Each depository institution shall— 

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

24 overdraft coverage program who engages in a 

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1 chine or a branch teller if completing the trans2 action would trigger overdraft coverage fees, in3 cluding the amount of the fees; and 

4 ‘‘(B) provide to the consumer the oppor5 tunity to cancel the transaction before it is 

6 completed. 

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

8 may charge not more than one overdraft coverage 

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

10 6 overdraft coverage fees in any single calendar 

11 year, per transaction account. 

12 ‘‘(3) REASONABLE AND PROPORTIONAL OVER13 DRAFT COVERAGE FEES.— 

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

15 overdraft coverage fee that a depository institu16 tion may assess for paying a transaction (in17 cluding a check or other debit) shall be reason18 able and proportional to the amount of the 

19 overdraft. 

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

21 The Bureau, in consultation with the Board of 

22 Governors of the Federal Reserve System, 

23 Comptroller of the Currency, the Board of Di24 rectors of the Federal Deposit Insurance Cor25 poration, and the National Credit Union AdVerDate Sep 11 2014 02:27 May 14, 2016 Jkt 059200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H5198.IH H5198

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1 ministration Board, may issue rules to provide 

2 an amount for any overdraft coverage fee that 

3 is presumed to be reasonable and proportional 

4 the amount of the overdraft. 

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

6 overdraft coverage fees charged to consumers, each 

7 depository institution shall post transactions with re8 spect to transaction accounts in such a manner that 

9 the consumer does not incur avoidable overdraft cov10 erage fees. 

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

12 charge an overdraft coverage fee on any category of trans13 action, if the overdraft results solely from a debit hold 

14 amount placed on a transaction account that exceeds the 

15 actual dollar amount of the transaction. 

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

17 implementing the requirements of this section, each depos18 itory institution shall provide to consumers who have not 

19 consented to participate in an overdraft coverage program, 

20 transaction accounts having the same terms, conditions, 

21 or other features as those that are provided to consumers 

22 who have consented to participate in such overdraft cov23 erage program, except for features of such overdraft cov24 erage. 


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1 ‘‘(l) NONSUFFICIENT FUND FEE LIMITS.—No depos2 itory institution may charge any nonsufficient fund fee 

3 with respect to— 

4 ‘‘(1) any transaction at an automated teller ma5 chine; or 

6 ‘‘(2) any debit card transaction. 

7 ‘‘(m) REPORTS TO CONSUMER REPORTING AGEN8 CIES.—No depository institution may report negative in9 formation regarding the use of overdraft coverage by a 

10 consumer to any consumer reporting agency (as that term 

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

12 (15 U.S.C. 1681a)) when the overdraft amounts and over13 draft coverage fees are repaid under the terms of an over14 draft coverage program. 

15 ‘‘(n) RULE OF CONSTRUCTION.—No provision of this 

16 section may be construed as prohibiting a depository insti17 tution from retaining the discretion to pay, without assess18 ing an overdraft coverage fee or charge, an overdraft in19 curred by a consumer.’’. 

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

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

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

23 following new item: 

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


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1 SEC. 5. REGULATORY AUTHORITY OF THE BUREAU. 

2 Not later than 24 months after the date of the enact3 ment of this Act, the Bureau of Consumer Financial Pro4 tection (hereafter in this Act referred to as the ‘‘Bureau’’) 

5 shall issue such final rules and publish such model forms 

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

7 Lending Act, as added by this Act. 

8 SEC. 6. EFFECTIVE DATE. 

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

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

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

12 the Bureau under this Act or such amendments are pre13 scribed in final form. 

14 (b) MORATORIUM ON FEE INCREASES.— 

15 (1) IN GENERAL.—During the 1-year period be16 ginning on the date of the enactment of this Act, no 

17 depository institution may increase the overdraft 

18 coverage fees or charges assessed on transaction ac19 counts for paying a transaction (including a check or 

20 other debit) in connection with an overdraft or for 

21 nonsufficient funds. 

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

23 terms ‘‘depository institution’’, ‘‘overdraft’’, ‘‘over24 draft coverage fee’’, ‘‘transaction account’’ and 

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


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1 in section 140B(o) of the Truth in Lending Act, as 

2 added by this Act. 

Æ 


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