New rules proposed in Congress for overdraft charges

Geoff Williams

Earlier today, Senators Chris Dodd, Jack Reed, Charles Schumer and Sherrod Brown unveiled a long awaited bill that will, if enacted, make it harder for banks to lob overdraft fees at their customers.

If the Fairness and Accountability in Receiving (FAIR) Overdraft Coverage act passes, it will do many things, including:

  • require banks to warn customers if a withdrawal made at an ATM or bank branch will overdraw their account.

  • keeping banks from processing debits to make it likely that more transactions will incur "bounce" fees

  • require overdraft fees to be in proportion to the bank's costs in processing them

  • forbid banks from automatically enrolling customers in overdraft programs without their permission

  • prohibit banks from including overdraft protection in a statement of the customer's available balance

  • limit the number of overdraft fees that banks can charge from one per month to six per year