Overdraft Loans

The banking industry is making forays into the high-cost lending market with “bounce protection” plans, a new form of high-cost credit that boosts fee income for banks. Using aggressive marketing techniques, banks are encouraging their low- and moderate-income customers to use bounce loans as a source of credit. Rather than denying a withdrawal, banks permit customers to overdraw at the ATM or through debit card transactions without informing them about the overdraft or accompanying fees.

Letters in support of H.R. 3904, the Overdraft Protection Act of 2009 and S. 1799, the Fairness and Accountability in Receiving (FAIR) Overdraft Coverage Act of 2009, October 28, 2009 PDF

Comments to the Federal Reserve Re: Regulation Overdraft Loans under Regulation E, March 30, 2009 PDF 61KB

Press Release: Jury’s Out on Regulators’ New Proposal to Address Abusive Overdraft Loans, December 22, 2008 PDF 68KB

Comments of NCLC and others re: Proposed Rulemaking to Prohibit Unfair or Deceptive Acts or Practices with Respect to Credit Cards and Overdraft Loans, August 4, 2008 PDF 300KB

Press Release: Regulators’ Overdraft Proposal Falls Short: Fails to Protect Consumers from Unwanted Credit, May 2, 2008 PDF (305KB)

Press Release: FRB Overdraft Loan Proposals Fail to Protect Consumers, May 2005 PDF (165KB)

Press Release: Consumer Groups Urge Federal Reserve Board to Stop Abusive Bank Overdraft Charges, January 2003 PDF (174KB)

Policy Analysis

Testimony before the U.S. House Committee on Financial Services Subcommittee on Financial Institutions and Consumer Credit regarding “Overdraft Protection: Fair Practices for Consumers”, July 11, 2007 PDF (216KB)

Comments regarding FRB Proposal to Regulate Bounce Loans under Truth in Savings and Proposed Interagency Guidance and selected, August 2004 PDF (173KB)
Appendices to Comments PDF (437KB)

Comments: to the FRB on Bounce Protection Products, April 2003 PDF (203KB)

Comments: Open End Credit and HOEPA Triggers and Solicitation for Comments on Bounce Protection Products, January 2003

Appendix: Bounce Protection: How Banks Turn Rubber into Gold by Enticing Consumers to Write Bad Checks - An Examination of Bounce Protection Plans