Stop Overdraft Profiteering during COVID-19 Emergency Act of 2020

To prohibit depository institutions from assessing overdraft and nonsufficient fund fees during the novel coronavirus crisis and other disasters, and for other purposes. 1. Short title This Act may be cited as the Stop Overdraft Profiteering during COVID–19 Emergency Act of 2020 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 each individual overdraft transaction. (4) Many depository institutions— (A) 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; and (B) charge unreasonable nonsufficient fees. (5) Such abusive practices in connection with overdraft coverage fees and nonsufficient fees have deprived consumers of meaningful options and placed significant financial burdens on low- and moderate-income consumers. (6) During the public health and financial crisis caused by the novel coronavirus, consumers need relief from such abusive practices more than ever before. (b) Purpose It is the purpose of this Act to protect consumers by eliminating abusive overdraft coverage fees, nonsufficient fund fees, and practices relating to the assessment of those fees during covered periods. 3. Definitions In this Act: (1) Check The term check (A) has the meaning given the term in section 3(6) of the Check Clearing for the 21st Century Act ( 12 U.S.C. 5002(6) (B) does not include a traveler’s check. (2) Checking account penalty fee The term checking account penalty fee (3) Consumer The term consumer 15 U.S.C. 1602(i) (4) Consumer reporting agency The term consumer reporting agency 15 U.S.C. 1681a (5) Covered period The term covered period (A) the period that begins 1 day after the date on which a major disaster is declared by the President under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act ( 42 U.S.C. 5170 42 U.S.C. 5174 (B) the period that begins 1 day after the date on which the President determines an emergency exists under section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act ( 42 U.S.C. 5191(b) (6) Depository institution The term depository institution 12 U.S.C. 461(b)(1)(A) (7) Nonsufficient fund fee The term nonsufficient fund fee (8) Overdraft The term overdraft (9) Overdraft coverage The term overdraft coverage (10) Overdraft coverage fee The term overdraft coverage fee (A) a periodic rate in connection with an extension of credit through an overdraft line of credit program; or (B) a fee or charge imposed in connection with any transfer from an account linked to another transaction account. (11) Overdraft coverage program The term overdraft coverage program (12) Transaction account The term transaction account 12 U.S.C. 461(b)(1)(C) 4. Checking account penalty fees (a) Prohibition (1) In general During a covered period, no depository institution may assess a checking account penalty fee for any transaction, including a transaction at an automated teller machine, a 1-time debit card transaction, a transaction that involves the use of a check, or an automatic recurring payment. (2) Correction If a depository institution assesses a checking account penalty fee during a covered period in violation of paragraph (1), the depository institution shall be considered to be in compliance with that paragraph if the depository institution promptly reverses that assessment. (b) Reports to consumer reporting agencies During a covered period, no depository institution may report negative information regarding the use of overdraft coverage by a consumer to any consumer reporting agency. (c) Limitation with respect to State-Specific disasters With respect to a major disaster described under section 3(5)(A), this section shall only apply to a customer of a depository institution who is a resident of the State or Tribe where the major disaster was declared. (d) Rule of construction Nothing in this section may be construed as prohibiting a depository institution, during a covered period, from retaining the discretion to pay, without assessing a checking account penalty fee, an overdraft incurred by a consumer.

Summary: Stop Overdraft Profiteering during COVID-19 Emergency Act of 2020 This bill suspends, during a major disaster or emergency declaration and for 120 days after the end of the incident period, certain penalties applicable to consumer transaction accounts. During such a period, depository institutions are prohibited from charging checking-account penalties (i.e., non-sufficient fund fees and overdraft coverage fees), or  reporting a consumer's overdraft use to a credit reporting agency.