Bank executives shouldn’t be allowed to scam hardworking families to pay for a CEO’s yacht. But that’s what’s happening as expensive, unexpected overdraft fees are costing too many Americans.
Overdraft protection used to be a free perk, understanding that sometimes mistakes happen – a bank transfer takes longer than someone expects, or a paycheck is delayed because of a holiday. Allowing customers to make purchases anyway, by temporarily overdrawing their account, helped many families.
But the same big banks that have gotten rid of free checking accounts have turned overdraft protection into huge profits – on the backs of hardworking Ohioans.
Rather than overdraft protection helping families avoid a bounced check, like it used to, banks now charge automatic fees whenever someone overdraws their account – and those fees are getting higher and higher.
Banks also regularly reorder transactions to generate the highest possible fees for the bank – and the highest possible cost to the customer. That’s right – banks are exploiting Ohio customers by going in and manipulating their accounts, ripping them off with higher fees than they should be charged.
And often banks bury the possibility of these charges in the fine print of account agreements.
TCF Bank recently agreed to pay back $25 million to consumers it tricked into signing up for expensive overdraft products by misleading customers into believing they had to sign up for it in order to open an account. TCF’s CEO was so proud of his scam, he named his yacht “Overdraft.”
That’s why this month, I introduced the Stop Overdraft Profiteering Act, to protect Ohioans’ hard earned paychecks.
My bill requires banks to process transactions in a way that minimizes overdraft fees, requires those fees be reasonable, and limits the number of fees that can be charged. It would ban overdraft fees on debit card transactions and ATM withdrawals altogether, and ensure that overdraft fees on rent and utility payments are fair and affordable.
These fees are a tax on paychecks that are already stretched thin.
Banks should be set up to serve customers – not scam them to pad their CEOs’ bottom-lines. Our bill will work to change that.
Sherrod Brown is the senior U.S. senator from Ohio.