AFFIL And Partners Say Institutions Should Be Required To Obtain Consumers’ Affirmative Consent Before Covering Overdrafts For A Fee
AFFIL and our Partners submitted this letter (PDF) to the Federal Reserve Board regarding its overdraft loan proposal. Here’s an excerpt from the letter:
We, the undersigned civil rights, labor, consumer, housing and community groups, write to thank the Federal Reserve Board for bringing attention to abusive overdraft practices while urging you to choose the far stronger opt-in proposal. For a rule addressing fee-based overdraft to adequately protect consumers, it must at a minimum require institutions to obtain consumers’ affirmative consent. An opt-out arrangement will do little to alter the status quo.
Currently, institutions generally enroll consumers in their most expensive overdraft programs automatically. Under an opt-out arrangement, institutions could continue to do so, and the burden would rest entirely with consumers to unsubscribe. Instead, institutions should be required to obtain consumers’ affirmative consent before covering overdrafts for a fee.
See previous posts about overdraft loans for more information.