The Consumer Financial Protection Bureau (CFPB) should not base decisions on overdraft protection rulemaking on the current 2011-2012 data it uses, nor should it conflate credit union overdraft products with those of big banks, CUNA told the bureau in a letter last week. CUNA sent the letter in response to the CFPB’s release of prototypes of an overdraft disclosure form and report on overdraft practices.
“Credit unions offer overdraft programs as a convenience and accommodation to their members. As the Bureau proceeds with its inquiry into whether changes are needed for overdraft protection programs, we urge it to engage in a thorough analysis to ensure it has obtained all the relevant information,” the letter reads. “Further, we encourage the CFPB to continue to study overdraft so it can gain a better understanding of the benefits consumers derive from this product, and the differences between the overdraft products offered by credit unions and other financial institutions.”
The bureau released the prototypes and reports in August, focusing on frequent overdrafters. The report utilizes transaction-level data from January 2011 to June 2012, provided by a small number of large banks.
These are banks covered by the CFPB’s supervisory authority and do not include credit unions, thrifts, or banks with assets under $10 billion.
CUNA’s own survey on overdraft protection has found that chronic use of/reliance overdraft protection services by credit union members is “virtually non-existent.” Approximately one-third of all members have ever used such services, and of those members, only 2% reported using it once a month or more in preceding year.
This number represents .6% of credit union members.
CUNA is also concerned that the CFPB’s reports come from only a handful of large banks, and stressed in the letter that “any efforts by the CFPB to apply a one-size-fits-all approach in the area of overdraft would be wholly misguided.”