Stop Overdraft Profiteering Act of 2019

To amend the Truth in Lending Act to limit overdraft fees and establish fair and transparent practices related to the marketing and provision of overdraft coverage programs at depository institutions, and for other purposes. 1. Short title This Act may be cited as the Stop Overdraft Profiteering Act of 2019 2. Findings and purpose (a) Findings Congress finds the following: (1) Overdraft coverage is a form of short-term credit that depository institutions market for consumer transaction accounts. Historically, depository institutions covered overdrafts for a fee on an ad hoc basis. (2) With the growth in specially designed software programs and in consumer use of debit cards, overdraft coverage for a fee has become more prevalent. (3) Many depository institutions market a range of overdraft options but aggressively encourage consumers to consent to the most expensive option, where a high flat fee is collected for every individual overdraft transaction. (4) Many depository institutions collect a high flat fee, including for small dollar transactions, each time the institution covers an overdraft, impose multiple overdraft coverage fees within a single day, and charge additional fees for each day during which the account remains overdrawn. (5) Such abusive practices in connection with overdraft coverage fees have deprived consumers of meaningful options and placed significant financial burdens on low- and moderate-income consumers. (b) Purpose It is the purpose of this Act to protect consumers by limiting abusive overdraft coverage fees and practices and by providing meaningful disclosures and consumer choice in connection with overdraft coverage fees. 3. Definitions In this Act: (1) CFPB The term CFPB (2) Depository institution; overdraft; overdraft coverage fee; transaction account; nonsufficient fund fee The terms depository institution overdraft overdraft coverage fee transaction account nonsufficient fund fee 4. Fair marketing and provision of overdraft coverage programs (a) In general Chapter 2 of the Truth in Lending Act ( 15 U.S.C. 1631 140B. Overdraft coverage program disclosures and consumer protection (a) Prohibitions No depository institution may engage in acts or practices in connection with the marketing of or the provision of overdraft coverage that are designed to evade the provisions of this section. (b) Marketing disclosures Each depository institution that provides or offers to provide overdraft coverage with respect to transaction accounts held at that depository institution shall clearly and conspicuously disclose in all marketing materials for such overdraft coverage any overdraft coverage fees with respect to such overdraft coverage. (c) Overdraft coverage fees (1) In general Except as provided in paragraph (2), no depository institution may charge an overdraft coverage fee for any transaction— (A) at an automated teller machine; or (B) involving a one-time debit card transaction. (2) Overdraft fees permitted for checks and automatic recurring payments A depository institution may charge an overdraft coverage fee for a check or an automatic recurring payment as part of an overdraft coverage program that incorporates the requirements identified in subsections (d) through (l). (d) Consumer consent opt-In A depository institution may charge overdraft coverage fees with respect to the use of checks or automatic recurring payments only if— (1) the depository institution has waited at least 3 days after opening an account to offer the overdraft coverage program; and (2) the consumer has consented in writing, in electronic form, or in such other form as is permitted under regulations of the Bureau. (e) Consumer disclosures Each depository institution shall clearly disclose to each consumer covered by an overdraft protection program of that depository institution— (1) that the consumer may be charged for not more than 1 overdraft coverage fee in any single calendar month and not more than 6 overdraft coverage fees in any single calendar year, per transaction account; (2) information about any alternative overdraft products that are available (such as linked accounts, lines of credit, and alerts), including a clear explanation of how the terms and fees for such alternative services and products differ; and (3) such other information as the Bureau may require, by rule. (f) Periodic statements Each depository institution that offers an overdraft coverage program shall, in each periodic statement for any transaction account that has an overdraft coverage program feature, clearly disclose to the consumer the dollar amount of all overdraft coverage fees and nonsufficient fund fees charged to the consumer for the relevant period and year to date. (g) Exclusion from account balance information No depository institution may include the amount available under the overdraft coverage program of a consumer as part of the transaction account balance of that consumer and the transaction account balance shall be more prominently displayed than any amount available under the overdraft coverage program. (h) Prompt notification Each depository institution shall promptly notify consumers, through a reasonable means selected by the consumer, when overdraft coverage has been accessed with respect to the account of the consumer, not later than on the day on which such access occurs, including— (1) the date of the transaction; (2) the type of transaction; (3) the overdraft amount; (4) the overdraft coverage fee; (5) the amount necessary to return the account to a positive balance; and (6) whether the participation of a consumer in an overdraft coverage program will be terminated if the account is not returned to a positive balance within a given time period. (i) Terminated or suspended coverage Each depository institution shall provide prompt notice to the consumer, using a reasonable means selected by the consumer, if the institution terminates or suspends access to an overdraft coverage program with respect to an account of the consumer, including a clear rationale for the action. (j) Overdraft coverage restrictions and fee limits for checks and automatic recurring payments (1) Frequency A depository institution may charge not more than 1 overdraft coverage fee in any single calendar month, and not more than 6 overdraft coverage fees in any single calendar year, per transaction account. (2) Reasonable and proportional overdraft coverage fees (A) In general The amount of any overdraft coverage fee shall be reasonable and proportional to the cost to the financial institution in providing the overdraft coverage for that transaction, including the cost to the financial institution of funds and other costs directly associated with the transaction. (B) Safe harbor rule authorized The Bureau, in consultation with the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Board of Directors of the Federal Deposit Insurance Corporation, and the National Credit Union Administration Board, may issue rules to provide an amount for any overdraft coverage fee that is presumed to be reasonable and proportional to the costs to the financial institution in providing the overdraft coverage for the transaction. (3) Posting order Each depository institution shall post transactions with respect to transaction accounts in such a manner that minimizes overdraft coverage fees and nonsufficient fund fees. (k) Debit holds No depository institution may charge an overdraft coverage fee on any category of transaction, if the overdraft results solely from a debit hold amount placed on a transaction account that exceeds the actual dollar amount of the transaction. (l) Nondiscrimination for not opting In In implementing the requirements of this section, each depository institution shall provide to consumers who have not consented to participate in an overdraft coverage program transaction accounts having the same terms, conditions, or other features as those that are provided to consumers who have consented to participate in such overdraft coverage program, except for features of such overdraft coverage. (m) Nonsufficient fund fee limits No depository institution may charge any nonsufficient fund fee with respect to— (1) any transaction at an automated teller machine; or (2) any debit card transaction. (n) Reports to consumer reporting agencies (1) In general No depository institution may report negative information regarding the use of overdraft coverage by a consumer to any consumer reporting agency, as defined in section 603 of the Fair Credit Reporting Act ( 15 U.S.C. 1681a (2) Deletion A depository institution shall request that the consumer reporting agency described in paragraph (1) delete any previously reported negative information, including closure of an account due to unpaid overdrafts, if the consumer repays the overdrafts or tenders payment for the overdrafts to the depository institution or its successor. (o) Rule of construction No provision of this section may be construed as prohibiting a depository institution from retaining the discretion to pay, without assessing an overdraft coverage fee or charge, an overdraft incurred by a consumer. (p) Definitions relating to overdraft coverage For purposes of this section: (1) Check The term check (A) has the meaning given the term in section 3 of the Check Clearing for the 21st Century Act ( 12 U.S.C. 5002 (B) does not include a traveler's check. (2) Depository institution The term depository institution 12 U.S.C. 461(b)(1)(A) (3) Nonsufficient fund fee The term nonsufficient fund fee (4) Overdraft The term overdraft (5) Overdraft coverage The term overdraft coverage (6) Overdraft coverage fee The term overdraft coverage fee (A) means any fee or charge assessed in connection with overdraft coverage, or in connection with any negative account balance that results from overdraft coverage; and (B) does not include— (i) a periodic rate in connection with an extension of credit through an overdraft line of credit program; and (ii) a fee or charge imposed in connection with any transfer from an account linked to another transaction account. (7) Overdraft coverage program The term overdraft coverage program (8) Transaction account The term transaction account 12 U.S.C. 461(b)(1) . (b) Technical amendment The table of contents for chapter 2 of the Truth in Lending Act is amended by inserting after the item relating to section 140A the following: 140B. Overdraft coverage program disclosures and consumer protection. . 5. Regulatory authority of the CFPB Not later than 2 years after the date of the enactment of this Act, the CFPB shall issue such final rules and publish such model forms as necessary to carry out section 140B of the Truth in Lending Act, as added by section 4 of this Act. 6. Effective date (a) In general This Act and the amendments made by this Act shall take effect 1 year after the date of the enactment of this Act, whether or not the rules of the CFPB under this Act or such amendments are prescribed in final form. (b) Moratorium on fee increases During the 1-year period beginning on the date of the enactment of this Act, no depository institution may increase the overdraft coverage fees or charges assessed on transaction accounts for paying a transaction (including a check or other debit) in connection with an overdraft or for nonsufficient funds.

Summary: Stop Overdraft Profiteering Act of 2019 This bill prohibits a depository institution from engaging in certain acts in connection with overdraft coverage. Each depository institution that offers overdraft coverage for accounts must disclose overdraft coverage fees and certain related information. A depository institution must provide certain other disclosures regarding its overdraft protection program, including prompt notification of the account's overdraft status. The bill limits the number of overdraft fees a consumer may be charged each month and year and provides that such fees must be reasonable. The bill prohibits an overdraft coverage fee if the overdraft results solely from a debit hold amount that exceeds the actual dollar amount of the transaction. The bill also prohibits a depository institution from charging a non-sufficient fund fee for any debit card transaction, or reporting negative information regarding consumer use of overdraft coverage to any consumer reporting agency when the overdraft amounts and coverage fees are paid under the terms of an overdraft coverage program.