California Attorney General Rob Bonta issued a statement following Congress's decision to overturn a Consumer Financial Protection Bureau (CFPB) rule that aimed to limit overdraft fees to $5. Currently, banks often charge $35 per overdraft. The annulled rule was projected to save Americans billions of dollars annually.
"Congress just voted to increase bank fees, overturning a CFPB rule that would have saved hardworking American families billions a year — this directly harms consumers already struggling with affordability and the ripples of inflation," said Attorney General Bonta. "Let me be clear: by allowing big banks to charge high overdraft fees, Congress is paving the way for wealthy banks to get wealthier, and for working class people to be squeezed even further."
The financial impact of overdraft fees on families can be substantial, often leading to severe financial challenges. California consumers alone paid an estimated $200 million in overdraft fees in 2022. The burden of these fees falls more heavily on low-income consumers and consumers of color. Across the nation, financial institutions earned over $7.7 billion from overdraft and non-sufficient funds fees in the same year.
Attorney General Bonta has consistently advocated for consumer protections, particularly in limiting overdraft fees. Last month, Bonta filed amicus briefs in lawsuits challenging attempts to dismantle the CFPB under the Trump Administration, arguing the adverse effects such actions would have on consumers. In April 2024, Bonta supported a rule to close loopholes that allow banks to charge overdraft fees without adequately disclosing basic credit terms. Additionally, in February 2024, he warned smaller banks and credit unions about the disproportionate impact of overdraft fees on lower-income consumers and consumers of color, highlighting the potential violation of consumer protection laws.