Comments due on CFPB proposed rule limiting OD fees for very large banks

The CFPB on Jan. 17, 2024, announced a proposed rule to limit overdraft fees charged by insured financial institutions with more than $10 billion in assets. The proposal would amend Regulation Z to eliminate the exclusion of overdraft fees greater than required to recoup costs at an established benchmark or at a cost the banks calculate, if they show their cost data, from the definition of "finance charge."

Very large financial institutions would be required to treat overdraft loans like credit cards and other loans and to provide clear disclosures and other protections, using a credit account separate from the consumer's deposit account. It would also amend Regulation E to prohibit very large financial institutions from conditioning an extension of overdraft credit to a consumer on the consumer's repayment by preauthorized electronic fund transfers.

Comments on the CFPB’s proposal will be accepted through April 1, 2024. The CFPB proposes that a final rule relating to the proposal would have an October 1 effective date at least 6 months after the final rule is published in the Federal Register.

• Proposed rule
• Unofficial redline of proposed amendments to Regulations E and Z
• Fact Sheet on the proposed rule
• CFPB Director Rohit Chopra’s prepared remarks on the press call for this announcement
• Publication and comment period update: Published at 89 FR 13852 in the Feb. 23, 2024, Federal Register. Comments are due by Apr. 1, 2024.