CBA Statement On CFPB’s Misleading Overdraft Press Release

December 19, 2023

WASHINGTON, D.C. – Consumer Bankers Association (CBA) President and CEO Lindsey Johnson today released the following statement in response to the Consumer Financial Protection Bureau’s (CFPB) press release regarding its new overdraft report:

“The CFPB cut important corners today, because they rely on a study that is limited to consumers with credit histories. That means that as many as 10 percent – or 26 million – of Americans who are “credit invisible” are excluded from its analysis. In doing so, the Bureau continues to overlook consumers on the margins that may benefit most from overdraft services due to their not having access to other well-regulated credit products like credit cards.

“It’s no surprise then that the Bureau confuses correlation and causation with headlines flagging that consumers that use overdraft frequently struggle to pay their bills. Overdraft services exist for that very consumer. These services are an essential safety net for consumers who may experience short-term liquidity gaps and income or expense shocks. Unlike the cherry-picked sample from the CFPB’s press release, the broader population that relies on overdraft services frequently lacks access to traditional credit products like credit cards and, absent overdraft, may need to turn to less-regulated sectors for credit alternatives like payday loans, pawn shops, or auto title loans.

“Notwithstanding these issues, the CFPB’s press release still notes that the majority of Americans in their sample set that used overdraft services did so intentionally. And, as Director Chopra has acknowledged in several other forums, our members continue to vigorously compete and innovate to improve consumer financial resilience with products like post-overdraft grace periods, waiving fees for de minimis overages (in some cases as high as $100), the ability to stop pre-scheduled payments, maximum frequency caps, and low-balance alerts, in addition to other innovations like early paycheck availability, remote deposit capture, and real-time payments. As Director Chopra and many others have confirmed, these innovations have saved consumers billions of dollars in recent years while preserving access to this important safety net for consumers.”

CBA Advocacy

  • To read what regulators, legislators, scholars, thought leaders, and the media are saying about these bank-led overdraft innovations, click HERE.
  • To read CBA’s recent blog post on how the CFPB’s forthcoming overdraft proposal could stifle innovation and competition, click HERE.
  • To read CBA’s July 2023 letter to the Senate Banking Committee’s Financial Institutions and Consumer Protection Subcommittee reiterating opposition to the Biden Administration’s ongoing “junk fee” campaign that misrepresents well-regulated bank fees, 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.