Dodd Unveils Bill Addressing Checking Account Overdraft Fees

“At a time when many can afford it least, Connecticut consumers like Mario are being hit with hundreds of dollars in penalties for overdrawing on their account by just a few dollars. Banks should not be trying to bolster their profits at the expense of their customers,” said Dodd. “My legislation gives Connecticut consumers control over their bank accounts – giving them the chance to choose whether they want overdraft protection, establishing strict limits on these fees, and shining more light on these practices.”

The FAIR Overdraft Coverage Act will rein in abusive fees, give customers greater choice, and bring greater transparency to these programs. The bill would:

• Require banks to get a customer’s consent before enrolling them in an overdraft protection program for ATM and debit card transactions;
• Limit the number of overdraft coverage fees banks can charge to one per month and six per year;
• Require fees be proportional to the cost of processing the overdraft;
• Stop institutions from manipulating the order in which they post transactions in order to rack up extra fees,
• Require customers be notified when they overdraw their account and be given the option of being notified by email, text or traditional mail; and
• Require that customers be warned if an ATM or branch teller transaction will overdraw their account, and be given the chance to cancel the transaction.