WASHINGTON—Opposition to any legislation that would eliminate or limit overdraft protection programs has been expressed in a letter from NAFCU to the House Financial Services Committee ahead of a hearing on that issue.
Such a bill would result in significant negative impacts on borrowers and credit unions, NAFCU told Congress regarding the Overdraft Protection Act.
NAFCU wrote to the Committee ahead of its discussions this week regarding the Overdraft Protection Act.
NAFCU’s VP of Legislative Affairs Brad Thaler stated in the letter the association supports a “fair, transparent, and competitive market for consumer financial services,” but opposes the bill due to its “main concern” over proposed restrictions and the failure to recognize the “opt-in” feature many overdraft products have today.
“Rules for overdraft programs, originally issued by the Federal Reserve and now under the purview of the Consumer Financial Protection Bureau, made many services something that consumers must opt-in to,” Thaler stated. “This opt-in requirement gives consumers control and the overdraft rule’s notice requirements have helped consumers to better understand the cost of overdraft programs.”’
Data Highlighted
In addition, Thaler sought to turn lawmakers’ attention to recent data on the topic, urging lawmakers to keep in mind that:
- Credit union surveys of members have shown they “highly value the protection and peace of mind courtesy pay programs provide and the assurance that their transaction will go through at the point of sale.”
- NAFCU surveys have found a vast majority of credit unions report “offering specialized intervention and financial education for those who frequently use courtesy pay programs, to ensure that consumers are not overly reliant on these programs and are able to improve their financial health.”
- Many credit unions do not assess fees when an account is overdrawn by a de minimis amount and some place caps on the total number of NSF fees that can accumulate in a given period
- A majority of credit unions report they routinely waive fees when a member incurred the overdraft on accident and requests a fee waiver
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