The Consumer Financial Protection Bureau (CFPB) released a report on financial institutions’ reliance on overdraft fees Wednesday. According to the agency, revenues reached an estimated $15.47 billion in 2019.
“Rather than competing on quality service and attractive interest rates, many banks have become hooked on overdraft fees to feed their profit model,” said CFPB Director Rohit Chopra. “We will be taking action to restore meaningful competition to this market.”
The research also noted that 60.9% of credit unions had an overdraft program, less than among large banks. It also showed that credit unions with an overdraft program earned $42.33 in annual overdraft revenues per account, 6% less than large banks.
According to the CFPB, consumers at small institutions that charged lower overdraft fees faced similar outcomes as those at larger banks. The research also noted that fee harvesting practices persisted during the pandemic despite decreases in fees collected.
“The CFPB will take action against large financial institutions whose overdraft practices violate the law,” said Chopra on a Wednesday call.
Chopra also said that the CFPB will consider “additional policy guidance outlining unlawful practices.”