Attorney General Kwame Raoul, along with a coalition of 22 attorneys general, has issued an appeal to the U.S. House of Representatives and the House Financial Services Committee, urging them to oppose a resolution that seeks to overturn a rule implemented in 2024 by the Consumer Financial Protection Bureau (CFPB). This rule limits overdraft fees charged by the nation's largest banks.
"Vulnerable families cannot afford the burden of overdraft fees and resulting damage to their credit as they try to pay for necessities on top of additional debt they may have. That is why I am urging the House to vote against the overturning of CFPB’s 2024 rule limiting excessive overdraft fees," Raoul said, emphasizing his commitment to consumer protection.
The rule applies to banks holding over $10 billion in assets and sets a cap on overdraft fees to either $5 or the bank's actual costs. Despite this, the Senate has already passed a resolution to overturn the rule with a narrow bipartisan vote of 52-48.
The letter from Raoul and his colleagues highlights that the average overdraft fee is $35, which significantly exceeds the actual overdraft amount. These fees have been identified as a significant revenue source, bringing in about $5.8 billion for banks in 2023. The CFPB's rule mandates that fees over $5 be treated as interest on a loan, translating to an annual interest rate of 16,000% for the typical fee structure.
Raoul and the attorneys general underscore that the rule is vital for shielding customers from unexpected charges that can lead to account closures and other financial setbacks. They note that some major banks, such as Citigroup, Capital One, and Ally Bank, have already discontinued overdraft fees yet continue to provide overdraft protection.
Alongside Raoul, attorneys general from Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington, and Wisconsin have co-signed the letter. The Hawaii Office of Consumer Protection is also part of this coalition.