charging of such fees in connection with any such 
extension of funds; 
‘‘(2) such fee is imposed pursuant to the terms 
of a written agreement with the consumer which dis-
closes, in a clear and conspicuous manner—
‘‘(A) the amount of any fee imposed in 
connection with paying an overdraft; 
‘‘(B) any applicable disclosure required by 
this title in connection with such extension of 
credit, including the amount of the finance 
charge in connection with such fee or fees, as 
required by section 106; 
‘‘(C) the categories of transactions for 
which a fee for payment of an overdraft may be 
imposed, including whether an overdraft created 
by withdrawals at automated teller machines or 
other electronic fund transfers will be covered 
and a fee imposed; 
‘‘(D) the time period by which the con-
sumer must repay or cover any extension of 
credit in the form of payment of an overdraft; 
and 
‘‘(E) the circumstances under which the 
institution in which an account is held will not 
pay an overdraft; and
‘‘(F) other information required to be dis-
closed by regulation; 
‘‘(3) such fee is separately and conspicuously 
disclosed, each time the fee is imposed, in any peri-
odic statement provided to the consumer with re-
spect to such account. 
‘‘(b) CLARIFICATION
RELATING
TO
OVERDRAFT 
FEES.—In the case of any transaction account of a con-
sumer at any institution, the prohibition against an over-
draft protection fee under subsection (a) shall apply re-
gardless of whether the amount of such fee is the same 
as, or less than, any fee imposed by the institution with 
respect to such account for a check or other debit that 
is returned unpaid. 
‘‘(c) PROHIBITION
ON MISREPRESENTATIONS.—If 
any institution—
‘‘(1) will not extend funds under specific cir-
cumstances to cover an overdraft in any transaction 
account of a consumer at the institution; or 
‘‘(2) reserves the right to extend funds to pay 
any such overdraft on a discretionary basis, 
any representation by such institution that the institution 
will extend credit to cover all overdrafts on such account 
shall be a violation of this title.’’.
(B) CLERICAL AMENDMENT.—The table of 
sections for chapter 2 of the Truth in Lending 
Act is amended by inserting after the item re-
lating to section 139 the following new item:
‘‘140. Restrictions on overdraft protection programs or services.’’.
(3) RESTRICTIONS ON ADVERTISING OF OVER-
DRAFT PROTECTION PROGRAMS OR SERVICES.—
(A) IN GENERAL.—Chapter 3 of the Truth 
in Lending Act (15 U.S.C. 1661 et seq.) is 
amended by adding at the end the following 
new section: 
‘‘§ 148. Restrictions on advertising of overdraft pro-
tection programs or services 
‘‘(a) IN GENERAL.—In the case of an institution that 
maintains transaction accounts for consumers and offers 
a program or service under which the institution pays any 
overdraft on the account in exchange for payment of an 
overdraft protection fee, the institution may not make any 
of the following representations or statements with respect 
to such program or service in any advertisement or pro-
motion: 
‘‘(1) Any representation or statement describing 
a transaction account as free or no cost if the ac-
count includes, or is promoted as including, over-
draft protection services that involve the payment of 
overdraft protection fees.
‘‘(2) Any representation or statement encour-
aging use of the account as a service to meet short-
term credit needs or to obtain advances on a con-
sumer’s next payment of salary or wages. 
‘‘(3) Any representation or statement that the 
financial institution will honor all checks or other 
debits presented against the account, if the institu-
tion retains discretion at any time not to honor any 
check or other debit presented. 
‘‘(4) Any representation or statement that con-
sumers may overdraw their accounts and maintain a 
negative balance, if the terms of the account require 
the consumer to promptly repay or cover any over-
draft. 
‘‘(b) REGULATIONS.—The Board shall prescribe reg-
ulations implementing the restrictions set forth in sub-
section (a) pursuant to the authority of the Board under 
section 18(f) of the Federal Trade Commission Act, and 
may, by regulation or order, restrict such additional acts 
or practices that the Board finds to be unfair or deceptive 
in connection with the offering, operation, and advertising 
of overdraft protection programs and services.’’. 
(B) CLERICAL AMENDMENT.—The table of 
sections for chapter 3 of the Truth in Lending
Act is amended by inserting after the item re-
lating to section 147 the following new item:
‘‘148. Restrictions on advertising of overdraft protection programs or services.’’.
(4) CLARIFICATION
OF
FINANCE
CHARGE.—
Section 106(a) of the Truth in Lending Act (15 
U.S.C. 1605(a)) is amended by adding at the end 
the following new paragraph: 
‘‘(7) Overdraft protection fee.’’. 
(b) ELECTRONIC FUND TRANSFER ACT AMEND-
MENTS.—Section 904 of the Electronic Fund Transfer 
Act (15 U.S.C. 1693b) is amended by adding at the end 
the following new subsection: 
‘‘(e) RESTRICTIONS
ON OVERDRAFT PROTECTION 
SERVICES AND FEES.—
‘‘(1) IN GENERAL.—A financial institution that 
holds a consumer’s account may not impose an over-
draft protection fee on the account in connection 
with any payment of an electronic fund transfer ini-
tiated by the consumer at an automated teller ma-
chine operated by the financial institution in spite of 
a lack of sufficient funds in the consumer’s account 
to pay such electronic fund transfer, unless—
‘‘(A) the consumer has affirmatively re-
quested such service pursuant to section 
140(a)(1);
‘‘(B) the financial has provided a notice to 
the consumer, on the screen of the automated 
teller machine, or on a paper notice issued from 
such machine, after the transaction is initiated 
and before the consumer is irrevocably com-
mitted to completing the transaction, that the 
electronic fund transfer the consumer has re-
quested may initiate an overdraft protection fee, 
together with the amount of any such fee; 
‘‘(C) the consumer elects to continue in the 
manner necessary to effect the requested elec-
tronic fund transfer after receiving such notice; 
and 
‘‘(D) the overdraft protection fee imposed 
in connection with such transaction is clearly 
disclosed in the written documentation of the 
electronic fund transfer required by section 
906(a). 
‘‘(2) DISCLOSURE OF ACCOUNT BALANCES.—In 
the case of any financial institution that offers a 
program or service under which the institution pays 
any overdraft on a consumer’s account in exchange 
for the imposition of an overdraft protection fee in 
accordance with paragraph (1), the financial institu-
tion shall, in response to a balance inquiry initiated
by the consumer at an automated teller machine op-
erated by the financial institution, disclose only the 
actual dollar balance in the consumer’s account at 
the time of the request, which shall not include any 
additional amount of credit or overdraft protection 
the financial institution will pay under any agree-
ment with the consumer that permits the imposition 
of the overdraft protection fee. 
‘‘(3) 
OVERDRAFT
PROTECTION
FEE
DE-
FINED.—For purposes of this subsection, the term 
‘overdraft protection fee’ has the same meaning as 
in section 103(cc)(1).’’. 
(c) EXPEDITED FUNDS AVAILABILITY ACT AMEND-
MENTS.—
(1) DEFINITION.—Section 602 of the Expedited 
Funds Availability Act (12 U.S.C. 4001) is amended 
by adding at the end the following new paragraph: 
‘‘(26) OVERDRAFT
PROTECTION
FEE.—The 
term ‘overdraft protection fee’ has the same meaning 
as in section 103(cc)(1) of the Truth in Lending 
Act.’’. 
(2) RESTRICTIONS ON OVERDRAFT PROTECTION 
FEES.—Section 607 of the Expedited Funds Avail-
ability Act (12 U.S.C. 4006) is amended by adding 
at the end the following new subsection:
‘‘(f) RESTRICTIONS
ON OVERDRAFT PROTECTION 
FEES.—A depository institution may not—
‘‘(1) impose an overdraft protection fee on an 
account at such institution for paying any check 
drawn on the account in spite of a lack of sufficient 
funds in the account to pay such check or any simi-
larly activity unless the accountholder has affirma-
tively requested such service pursuant to section 
140(a)(1) of the Truth in Lending Act; or 
‘‘(2) engage in a pattern or practice of delaying 
the posting of any deposit in an account, or manipu-
lating the process of posting any check or other 
debit against an account, for the purpose of initi-
ating 1 or more overdrafts that trigger payment by 
the accountholder of an overdraft protection fee.’’. 
(d) FEDERAL RESERVE BOARD STUDY OF OVER-
DRAFT PROTECTION PROGRAMS OFFERED BY FINANCIAL 
INSTITUTIONS.—
(1) STUDY REQUIRED.—
(A) IN
GENERAL.—The Board of Gov-
ernors of the Federal Reserve System shall con-
duct a study of overdraft protection or avoid-
ance programs and services offered by financial 
institutions to determine the extent to which 
such programs or services are available to con-
sumers, the differences in operation and cost of 
such programs or services, and the benefits and 
risks of such programs or services for con-
sumers. 
(B) AREAS
FOR
STUDY.—In conducting 
the study under subparagraph (A), the Board 
shall consider, among other issues—
(i) the criteria used by financial insti-
tutions in designing or selecting overdraft 
protection programs and services; 
(ii) the extent to which financial insti-
tutions exercise discretion on whether to 
not to cover an overdraft and criteria used 
in exercising such discretion; 
(iii) the adequacy of information pro-
vided to customers regarding alternative 
overdraft protection programs or services 
and the cost and terms of such programs 
and services; 
(iv) the adequacy of disclosures in 
promotions and advertising relating to 
overdraft protection services; 
(v) the extent to which overdraft pro-
tection programs and services are con-
ducted by third-party vendors, the basis
for structuring vendor compensation ar-
rangements for these programs and serv-
ices, and the impact, if any, of linking ven-
dor compensation to increases in fee rev-
enue on the quality and cost of overdraft 
protection services; and 
(vi) the feasibility of providing notice 
in connection with point of sale debit 
transactions that a transaction initiated by 
the consumer will result in an overdraft 
protection fee if completed by the con-
sumer and the potential benefit of such 
disclosure to consumers. 
(C) 
CONSULTATION
REQUIRED.—The 
Board of Governors of the Federal Reserve Sys-
tem shall—
(i) consult with the other Federal 
banking agencies (as defined in section 3 
of the Federal Deposit Insurance Act) and 
the National Credit Union Administration 
Board in formulating and conducting the 
study required under subparagraph (A); 
and 
(ii) employ research methods and pro-
cedures, including consumer survey and
market tester programs, necessary to ad-
dress the issues required by subparagraph 
(B). 
(2) REPORT REQUIRED.—Before the end of the 
1-year period beginning on the date of the enact-
ment of this Act, the Board of Governors of the 
Federal Reserve System shall submit a report to the 
Committee on Banking, Housing and Urban Affairs 
of the Senate and the Committee on Financial Serv-
ices of the House of Representatives containing a 
detailed summary of the finding and conclusions of 
the study under this subsection, together with such 
recommendations for legislative or administrative ac-
tions as the Board may determine to be appropriate.
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