The US Senate Committee on Banking, Housing and Urban Affairs is holding a hearing this afternoon on the subject of "Protecting Consumers from Abusive Overdraft Fees: The Fairness and Accountability in Receiving Overdraft Coverage Act". The witnesses will be: Mr. Mario Livieri, Consumer, State of Connecticut; Mr. Michael Calhoun, President, Center for Responsible Lending; Mr. Frank Pollack, President and CEO, Pentagon Federal Credit Union; Mr. John Carey, Chief Administrative Officer, Citibank NA; and Ms. Jean Ann Fox, Director of Financial Services, Consumer Federation of America. READ MORE

Over on our PaymentsViews.com blog, Glenbrook's Carol Coye Benson reflects on yesterday's announcement by the Federal Reserve of new rules prohibiting banks from charging overdraft fees on debit card and ATM transactions without first obtaining consumer opt-in. Carol speculates on what retail banks will do to deal with the potential loss of overdraft fee revenue that could result.

The Federal Reserve Board has announced final rules that prohibit financial institutions from charging consumers fees for paying overdrafts on automated teller machine (ATM) and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.

Before opting in, the consumer must be provided a notice that explains the financial institution's overdraft services, including the fees associated with the service, and the consumer's choices. The final rules, along with a model opt-in notice, are issued under Regulation E, which implements the Electronic Fund Transfer Act and are effective July 1, 2010. READ MORE

In its SEC 10-Q filing today, Wells Fargo estimated that the impact of its new overdraft fee policies will be a $300 million after tax reduction in its fee revenue for 2010.

Quoting: "We recently announced policy changes that will help customers limit overdraft and returned item fees. We currently estimate that these changes will reduce our 2010 fee revenue by approximately $300 million (after tax), although the actual impact could vary due to a variety of factors including implementation timing and customer behavior in response to the policy changes."

SunTrust Banks and Moneta Corporation have announced that "SunTrust has selected Moneta’s online payment service to offer clients an additional payment option when they shop with select online retailers. The service is currently being provided free to select SunTrust clients as an initial pilot program." READ MORE

Congressional proposals to rein in abusive overdraft practices are long overdue, Center for Responsible Lending executive Eric Halperin told the House Financial Services Committee today (full testimony). Halperin, who is director of CRL's Washington office, gave full support to legislation aimed at reforming bank overdraft programs, which cost consumers $23.7 billion last year and are among the most predatory lending products on the market.

"Charging people a $35 fee for a small, debit card transaction is unacceptable," said Halperin, director of CRL's Washington office. "It doesn't save them bounced check fees, it simply skims money from their account and puts them in a bind."

Lieff Cabraser Heimann & Bernstein, LLP today announced the filing of a series of nationwide class action lawsuits against Bank of America, Wachovia, U.S. Bank, JPMorgan Chase and Citibank in the United States District Court for the Southern District of Florida in Miami for abusive overdraft fees. READ MORE

Senator Chris Dodd has announced the The Fairness and Accountability in Receiving (FAIR) Overdraft Coverage Act, a new bill he is introducing to "protect Americans from excessive checking account overdraft fees." READ MORE

TCF National Bank has announced that it will begin offering a new checking account product to customers called TCF Convenience Checking during the first quarter of 2010. According to the bank, its new Convenience Checking account "will eliminate the per item NSF fee and the returned item fee as well as offer many FREE checking benefits." READ MORE

The Network Branded Prepaid Card Association has announced that, according to an economic study recently completed by Michael Flores of Bretton Woods, "consumers who opt to use a network branded prepaid card could pay as much as 35-70% less in fees as compared to low balance checking and debit accounts, making prepaid cards a far more cost-effective, valuable financial tool for many." READ MORE

The Center for Responsible Lending has published a new study finding that US banks and credit unions collected nearly $24 billion in overdraft fees last year, an increase of 35 percent from two years earlier. READ MORE

Bankrate.com has published results from a new study of bank fees showing that the costs of checking accounts have risen again this year to an all-time high. Bankrate's 2009 Checking Study details the average fees associated with using and maintaining an interest bearing account, including bounced check fees, ATM surcharges, and monthly services fees, plus tips on how to avoid them. READ MORE

The rage around bank overdraft fees continues with an article titled "Overdraft 'Protection' Is Anything But" by Michelle Singletary in today's Washington Post.

She writes: "Clearly, people should be more responsible. But once again, financial services institutions have crossed the line of fairness. And to be honest, the federal government has helped them along. The federal agencies that regulate the industry determined several years ago that overdraft protection programs were not extensions of credit, a ruling that was ridiculous."

U.S. Bank has announced a series of modifications to its service charge policies on checking accounts that will take effect in the first quarter of 2010. The changes include eliminating overdraft fees when a customer's account is overdrawn by less than $10, limiting the number of overdraft fees to no more than three per day and offering "opt out" to customers who would prefer to have transactions declined rather than pay overdraft fees. READ MORE

In this evening's program, the NewsHour with Jim Lehrer featured a segment titled "Banks, Customers Face Changes to Debit Card Overdraft Fees". The NewsHour's Jeffrey Brown interviewed Ron Lieber from the New York Times - here's the transcript.

Wells Fargo this afternoon announced changes to its overdraft practices for Wells Fargo and Wachovia customers. In a press release, Wells Fargo said it will "eliminate overdraft fees for customers when they overdraw their accounts by $5 or less and will charge no more than four overdraft fees per day. In addition, Wells Fargo and Wachovia customers will be able to opt out of overdraft coverage, meaning customers can specify that they don’t want their transactions authorized into overdraft if funds aren’t available to cover the transaction." READ MORE

In an article titled "Chase and Bank of America Revise Fee Policies", Ron Lieber writes for the New York Times about announcements from Bank of America and Chase regarding changes both banks are planning to their overdraft fee policies.

In a press release, Bank of America announced changes to be implemented October 19 including not charging overdraft fees when a customer's account is overdrawn by a total amount less than $10 for one day, not charging overdraft fees on more than four items per day and making it easier to opt out of overdrafts altogether. Next June, the bank plans additional changes including providing customers a choice with respect to opting in or out of overdraft capability.

According to Lieber's reporting, Chase is planning changes in the first quarter including not charging a fee when the overdraft is for less than $5 and not sorting items in descending amounts prior to posting - a technique that maximizes the overdraft fees charged and has drawn criticism from consumer groups. Chase also plans to allow its customers to opt out of overdraft coverage.

In an article titled "Grocery stores taking check use off shoppers' lists", Jerry Hirsch writes for the Los Angeles Times about grocery stores, including Whole Foods Markets, considering banning the use of personal checks at their stores in favor of only accepting cash and cards. Hirsh quotes a Whole Foods regional vice president who says it "prefers cash, debit cards and credit cards because they can be processed quickly and come with added protections that safeguard the interests of the consumer and the retailer."

In an article titled "Democrats Target Bank Overdraft Charges", Binyamin Appelbaum and Nancy Trejos write for the Washington Post about how a backlash against the banks continues with congressional Democrats planning a "crackdown on overdraft fees" - most of which are associated with debit card transactions.

In an article titled "Overspending on Debit Cards Is a Boon for Banks" in today's New York Times, Ron Lieber and Andrew Martin write about the fees banks charge on debit card overdrafts - reporting that "this year alone, banks are expected to bring in $27 billion by covering overdrafts on checking accounts, typically on debit card purchases or checks that exceed a customer’s balance."

Speaking of debit cards, here's a blog post on the Consumer Reports blog about the hassles of using a check. You remember them, right?

The New York Times today has an editorial titled "Debit Card Trap" on the subject of the overdraft fees that many banks collect on debit card transactions when there aren't sufficient funds in the consumer's checking account. The Times cites research by Moebs Services finding that banks in the US "will earn more than $38 billion this year from overdraft and bounced-check fees. Moebs also estimates that 90 percent of that amount will be paid by the poorest 10 percent of the customer base."

The Times is urging that regulators adopt new rules - currently under consideration by the Fed - that would require consumer opt-in and would require notification in real-time when a debit card charge is going to result in an overdraft fee being charged.

Chase has announced a new program that gives its checking account customers "more rewards on every purchase when they use their Chase Freedom credit card."

“This is one more way to thank customers for doing more business with Chase,” said Scott Powell, head, Consumer Banking. “That’s especially important as consumers watch every dollar they earn and spend.”

According to Chase, its "Chase Exclusives program rewards Chase checking account customers with better rates, more rewards and bigger discounts on nearly all the financial products offered through Chase’s bank branches." READ MORE

In an article titled "USAA to launch deposit app", L.A. Lorek writes for MySanAntonio.com about USAA's plans to release a new iPhone application that will allow users to take photos of the front and back of a check and deposit it electronically directly from their iPhone.

Neil posts on the Money.AU blog that the big four Australian banking groups are reviewing their overdraft fees "after their rival National Australia Bank (NAB) has decided to cease charging customers who end up overdrawing their bank accounts." The NAB said it will stop charging overdraft fees beginning October 1st.

On-Line Strategies has announced it has completed certification and production implementation of an Electronic Check Acceptance interface with a major authorizer as part a Fortune 100 client project. According to OLS, "OLS.Switch is a payment transaction processing engine, built using best-of-breed technologies to implement a unique new design supporting the latest industry standards, regulations, and best practices for payments and settlement processing." READ MORE

According to research conducted by Moebs Services as part of its 22nd annual survey, "the national median for overdraft (OD) fees on consumer checking accounts, debit cards and ATMs increased to $26 per incident in 2009 from $25 per incident in 2008, a 4 percent increase, led primarily by Wall Street Banks – those with assets of more than $50 billion. These findings are the result of a just-completed nationwide survey of more than 2,000 commercial banks, savings institutions and credit unions." READ MORE

In an article title "Not-So-Personal Banking", Laura Lorber writes for the Wall St. Journal about more small businesses avoiding trips to the bank to deposit checks they've received - instead using remote deposit capture to transmit an image of the check electronically to their bank.

Remote deposit capture is the equivalent of the electronic draft capture POS terminal that moved the credit card world from paper to electronics over 20 years ago - finally coming to the world of checking. One of the implications of RDC, of course, is that the local bank branch becomes less important. Said differently, banks can now market services to small businesses outside of their branch footprint.

In Sunday's Washington Post, writers Nancy Trejos and Jonathan Starkey look at what's been happening to bank fees - noting that "your bank wants more of your money, and it's found a way to get it: by jacking up the fees on your account."

Examples? "Bank of America this year raised the maximum number of times customers can get hit with overdraft fees from five a day to 10. On top of that, it began charging a one-time fee of $35 if the account remains in the negative for more than five days."

More here.

Bling Nation has announced that "La Junta, Colo.-based The State Bank went live on May 21 with the Bling Nation Community Payments Service, a contactless payments network that enables banks and merchants to avoid global network costs and keep money within the community through a secure local debit network. The bank markets the local payments network as an alternative to expensive, traditional payments networks and accompanying rewards program as Redi Pay Bling." READ MORE