Legislation introduced in the U.S. Senate aims to curtail the ability of banks to impose overdraft fees on customers.
The Stop Overdraft Profiteering Act of 2018, a bill drafted by Sen. Cory Booker, D-N.J., would prohibit overdraft fees on debit card and ATM transactions, according to a report by Vox.com.
Banks would still be able to levy overdraft fees on check-based transactions, but the number of charges would be limited and banks would be prohibited from resequencing checks in order to maximize fees.
According to research by The Pew Charitable Trusts, 18 percent of accountholders currently pay more than 90 percent of overdraft and insufficient funds fees, and 70 percent of frequent overdrafters have household incomes of less than $50,000 annually. The full news release can be found here.
The bill, introduced Aug. 1, has to date been read twice in the Senate and referred to the Committee on Banking, Housing, and Urban Affairs. It has little chance of surviving in a Republican-dominated Congress, the Vox report said, but the threat of action could cause banks to voluntarily change their practices.
The full title of S.3343 is: “A bill to amend the Truth in Lending Act to limit overdraft fees and establish fair and transparent practices related to the marketing and provision of overdraft coverage programs at depository institutions, and for other purposes.”
The full news release can be found here.