The president of the Consumer Bankers Association (CBA) accused the Consumer Financial Protection Bureau (CFPB) of making “unsubstantiated claims” about overdraft fees after the federal agency released research on how much banks have related on such charges over the last six years.
Richard Hunt, who also serves as the trade organization’s CEO, claimed in a January 26 statement that the CFPB’s December 2021 findings were an attempt to alarm consumers.
“This is fuzzy math at its best and political theater at its worst, and another attempt by the Bureau to fearmonger without any credible data to back it up,” Hunt said in the statement.
The CFPB’s research found that revenue from overdraft fees and non-sufficient funds in 2019 was estimated at $15.47 billion, and the agency’s director said that banks have become reliant on such fees “to feed their profit model” rather than focus on customer service.
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CFPB using ‘overblown rhetoric’ on overdraft fees, says CBA president
Hunt said that the CFPB should focus its efforts on working with banks instead of scrutinizing overdraft fees, adding that it’s the agency’s responsibility to inform consumers so that they can make the most beneficial financial decisions.
“To best serve America’s families and small businesses, the Bureau has a responsibility to communicate with clarity and precision – not with overblown rhetoric to attack one industry,” he said. In a February press releasethe CBA also stated that the CFPB’s claims about overdraft fees were “not backed by reality” and would ultimately harm consumers.
Five trade organizations also sent a letter to CFPB Director Rohit Chopra in early January, urging the agency to examine consumers’ knowledge of overdraft fees and overdraft protection. The letter, in response to the CFPB’s findings on such fees, questioned the research and said it lacks “important facts about overdraft services.”
“It is critical that consumers continue to have diverse options for meeting shortfalls in funds. Together, we can ensure that consumers continue to have their payments honored even when the consumer is short of funds,” the letter concluded.
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Overdraft fees: Helpful or harmful to consumers?
The CBA said in its February press release that several claims about “junk” fees – including overdraft fees – made by the CFPB should be examined more closely. It claimed that overdraft fees made up a small percentage (2%) of banks’ total revenue in 2019, and that those fees have dropped by 77% per US adult since 2008.
In a tweet, the CBA said that the CFPB is trying to “attack the banking industry” with its claims about overdraft fees.
The CBA also noted that the CFPB claimed overdraft fees to make everyday expenses more difficult to afford, but refuted that by saying overdraft is a “safety net” for consumers.
“Overdraft provides a much-needed emergency safety net for millions of families who view the product as beneficial and knowingly use it to cover unexpected expenses in times of need. There is also a clear need for short-term liquidity provided by banks of all sizes , it said.
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Credit: www.fox5ny.com /