But it’s not for the reason they think.
By Toni Lapp, Senior Editor
As the mother of young adults, there are times that I witness growing pains that bring back distant memories of my own hard-learned lessons in life. I refer now to overdraft protection. When I was new to checking accounts, I initially appreciated the service, which some say amounts to a short-term loan. But I soon learned that the resulting fees could make the remedy worse than the problem. Imagine my dismay when my teenage son signed up for overdraft protection and incurred a $30 fee in the service of a $5 purchase.
Which is why, as a parent, I can appreciate the Consumer Financial Protection Bureau’s attempt to bring clarity to overdraft policies by releasing four prototype disclosure forms related to overdraft coverage.
On the surface, having a transparent policy seems reasonable.
And yet, Camden Fine, president of the Independent Community Bankers of America, issued this statement: “Overdraft services are an important aspect of community banks’ relationship with their customers. Consumers should continue to have the ability to opt-in for debit card overdraft coverage to avoid the inconvenience and embarrassment of a rejected debit card transaction. That said, ICBA adamantly opposes any CFPB rulemaking that limits the consumer’s choice on how they manage their accounts.”

Apps such as this one offer to save consumers from bank overdrafts.
Did I miss something? Nothing in the CFPB advisory said it would limit customers’ ability to choose overdraft coverage. If community banks value the relationship with their customers, shouldn’t they, too, want their customers to enter these agreements with eyes wide open?
Viveca Ware, executive vice president of regulatory policy for ICBA, elaborated in a phone interview. “We have not taken a position on the prototypes per se,” she said. “What we don’t want to see is new requirements. Right now, we’re not aware of any specific problems,” with the current forms in use, she said.
According to the CFPB, the prototype forms are designed to better ensure that the consumer can choose the option that best fits with their circumstances and preferences.
Only a few months ago, BankNews wrote about a startup that had created an app that would alert consumers to red flags when their accounts in danger of being overdrawn, and thus eliminate the potential of overdraft fees.
If community banks do not want their relationships with customers to be usurped by fintechs, banks themselves may want to be proactive and choose to be more straightforward with their customers about overdraft terms.







