Sen. Chris Dodd plans to introduce legislation that would require banks to get permission before allowing fee-generating overdrafts. Banks are on track to earn $38.5 billion in overdraft fees this year and, according to a study by the Federal Deposit Insurance Corp, most banks offer the “service” automatically. Common “features” of the programs include not notifying customers when an overdraft is about to occur, not offering them a chance to cancel the transaction, and processing the transactions in ways designed to increase the number of fees.
“People out there are getting whacked,” Dodd said. “They should have the right to say, ‘Deny me the transaction.’
The Federal Reserve periodically threatens to add regulations that would make overdraft fees “opt-in,” but mysteriously never seems to actually do it.
Is it time for Congress to step in?