Consumers Need Better Protections to Safeguard Bank Accounts
For Release: July 16, 2009 Contact: Jean Ann Fox, CFA, 928-772-0674 MST
The Federal Reserve has failed to protect consumers from unauthorized bank overdraft loans and, as a result of this inaction, fees for these extremely expensive loans are escalating and multiplying, Consumer Federation of America told members of the Senate Banking and the House Financial Services committees this week. Testifying in support of President Obama’s proposed Consumer Financial Protection Agency, CFA noted that regulatory inaction in just this one area is costing hard-pressed American consumers over $17.5 billion during the worst economic downturn since the Depression.
In a typical overdraft loan program, banks unilaterally loan money to consumers without the consumer’s knowledge or consent by paying or authorizing checks, debit card purchases, ATM withdrawals and preauthorized electronic payments when there is insufficient money in the account to cover the transaction.
Washington, DC – A new survey of overdraft fees charged by the nation’s largest banks reveals that bankers are hiking fees, adding new fees, and shortening time limits to trigger fees when banks pay overdrafts and extend credit to families struggling to make ends meet.
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