Seventeen State Attorneys General comment on CFPB overdraft proposal

State Issues State Attorney General CFPB New York Overdraft

State attorneys general (AGs) from 17 states recently sent a letter to the CFPB endorsing its proposed rule to amend TILA. The 17 states included New York as principal, California, Colorado, Connecticut, Delaware, the District of Columbia, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, North Carolina, Oregon, Pennsylvania, and Washington. As previously covered by InfoBytes, the proposed amendments would treat overdraft credits as loans, which would make them subject to consumer protections.

The AGs argued that the historical basis for excluding overdraft fees from TILA protections would be obsolete due to how the fees are assessed, the high fee amount, and the large number of overdraft transactions. The AGs wrote that closing the loophole would protect consumers by providing customers with disclosures so they can better understand the cost and enable them to comparison shop. The AGs supported a benchmark fee of $3, which is the lowest fee amount proposed by the CFPB, and argued that even a $6 fee would “undercount the volume of transactions generating a fee post-enactment” of the proposed rule. Finally, the AGs urged the CFPB to extend the proposed rule to both “very large financial institutions” (those with more than $10 billion in assets) and small financial institutions.