CBA Statement on CFPB Final Rule on Overdraft Services

Consumer Bankers Association (CBA) President and CEO Lindsey Johnson today released the following statement after the Consumer Financial Protection Bureau (CFPB) published its final rule on overdraft services for very large financial institutions, reclassifying overdraft services as credit products under the Truth in Lending Act (TILA) and imposing unauthorized restrictions on the fees they may charge for offering overdraft services.

"Overdraft services are a vital lifeline for millions of consumers – including the one in five Americans who lack access to credit.

“The CFPB’s rule jeopardizes access to overdraft services when hardworking Americans face unexpected expenses, leaving them with worse alternatives like payday loans and pawnshops.

“The CFPB also disregards the bank-led innovations that have enhanced consumer benefits and delivered significant savings within the overdraft ecosystem over the past decade. From instituting daily limits on the number of overdraft fees to overdraft cushions and grace periods, top banks have led the way in giving consumers more control over their finances.

“Given the harmful consumer impacts not considered by the CFPB and the blatant overreach of its statutory authority, CBA is exploring all potential options to ensure consumers continue to have access to this critical safety net.”

Why It Matters

The CFPB's rule will harm Americans in need by reducing the availability of overdraft services. Data show that consumers experiencing a short-term funding gap and those without credit access rely on overdraft services to put food on the table, keep their lights on, and make other important payments on time. 

Without overdraft services, they can be forced to turn to worse alternatives, such as taking out a payday loan, fees for late payments on essentials like rent and utilities, pawning or selling something, or borrowing money from friends and family. 

Moreover, the CFPB does not have the authority to impose government price controls on services by financial institutions, nor do overdraft services meet the statutory definition of a credit product. In releasing this rule, the CFPB also reverses 50 years of legal precedent without sufficient justification.

What Happened

• On January 4, 2024, the CFPB announced its notice of proposed rulemaking (NPRM) on overdraft lending for very large financial institutions, outlining a rule to reclassify overdraft services as credit products under the Truth in Lending Act (TILA).
• On April 1, 2024, CBA submitted its comment letter to the CFPB outlining its concerns with the proposal.
• On December 12, 2024, the CFPB released its final rule on overdraft services. The final rule exceeds the CFPB's regulatory authority, fails to appropriately consider how the rule could harm consumers, and relies on incomplete data.

CBA Advocacy

• To get the facts on the value of overdraft services and learn why government mandates are misguided, visit OverdraftFacts.com.
• To view CBA's recent national empirical survey on consumer need for overdraft products, click HERE.
• To read CBA President and CEO Lindsey Johnson's recent written Congressional testimony on why financial regulations should be guided by sound policy, not partisan politics, click HERE. 
• To read CBA's blog post on how limiting overdraft services will hurt consumers, click HERE.
• To read CBA SVP, General Counsel, and Head of Regulatory Affairs David Pommerehn's written congressional testimony on overdraft services, click HERE.