Facts Matter: CFPB Misrepresents Data Showing Dramatic Shift in the Overdraft Market

Banking industry calls for CFPB to stop using outdated data when portraying the state of the overdraft services market

WASHINGTON, D.C. – Over the past decade, many of the nation’s largest financial institutions have implemented significant reforms to their overdraft products and policies. These changes, which were introduced without legislative or regulatory intervention, have provided consumers with greater choice, flexibility, and savings. Unfortunately, policymakers obscure these savings when the most recent data isn’t presented to consumers. This is especially evident at the Consumer Financial Protection Bureau (CFPB), which continues to fundamentally misrepresent the current overdraft market.

As the Consumer Bankers Association (CBA) analysis outlines below, education materials released from the agency as recently as April 2024 continue to cite outdated overdraft revenue data from 2021, misinforming policymakers and consumers alike. Here are the facts:

Key Findings 

• Despite having access to data even from the prior quarter, CFPB consumer education materials cite outdated information, showing overdraft revenue from 2021 for 20 individual retail banks.

• If the CFPB were to update its materials with publicly available data, its chart would show those banks’ overdraft revenue has been collectively reduced by almost $3 billion or 42 percent.

• On average, banks listed in the CFPB’s chart decreased fees by 45 percent, yielding $145 million in savings for consumers.

The CFPB Needs to Correct the Record 

Since at least 2022, the CFPB has provided a high level table helping consumers and policymakers track changes in certain banks’ overdraft services. It tracks a range of innovations in the overdraft programs of the top 20 banks, prominently listing the overdraft revenue of each bank as its first column of data. 

While this information can serve to help consumers be aware of the extent of overdraft service revenue in the market and make better financial decisions for themselves, it only does so when that information is accurate and up to date. 

Although the CFPB regularly puts out updated tables with overdraft innovations and product changes – and the rest of the data in the chart reflects information as current as April 2024 – the CFPB continues to use overdraft revenue data from 2021, obscuring relevant information that could better inform consumer choices. 

Updated data is regularly made available to the public. The 2023 data, for instance, indicates that five banks reduced their overdraft revenue by over 85 percent. CFPB data made available elsewhere indicates the CFPB is aware of this dramatic shift. Yet, the CFPB concerningly does not correct the glaring omission in its table, potentially leading to confusion by consumers, media, policymakers, and other stakeholders. 

As the lead federal government agency tasked with protecting and providing information to consumers about financial products, the CFPB should more thoughtfully approach its use of data in these materials. These materials provide important context that better inform consumer choices and comparisons when shopping for a bank.

The Bottom Line 

Driven by a desire to meet evolving consumer demand, a growing share of America’s leading banks have unveiled innovative overdraft solutions designed to expand choice, strengthen transparency, and lower costs. These innovations – ranging from real-time payment updates to grace periods, posting alerts and no-fee overdraft accounts – are here to stay, and they’re making a meaningful difference in the lives of the people we are all working to serve.  

Policymakers have a responsibility to utilize the most accurate data available when seeking to advance any new rule or legislative proposal. For the CFPB, this mandate extends beyond policy development, given the agency’s mission to not only protect consumers, but to educate them on their options across the financial services industry. 

CBA Advocacy 

• To read CBA’s response to the CFPB’s misleading overdraft press release that accompanied its most recent report, click HERE.
• To read what regulators, legislators, scholars, thought leaders, and the media are saying about these bank-led overdraft innovations, click HERE.
• To read CBA President and CEO Lindsey Johnson’s op-ed urging policymakers to recognize the impact of recently unveiled bank-led overdraft innovations designed to expand choice, strengthen transparency, and lower costs for hardworking consumers, click HERE.
• To read CBA Senior Vice President, General Counsel, Head of Regulatory Affairs David Pommerehn’s testimony before the Senate Banking Committee Financial Institutions and Consumer Protection Subcommittee hearing on examining the effects of overdraft fees on working families from May 2022, click HERE.