Florida consumer advocate tells how to avoid overdraft fees

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Consumers who let their bank accounts temporarily fade into the negative are often hit with large overdraft fees; but it doesn’t have to be that way. A new report released this month by Florida PIRG – called Big Banks, Big Overdraft Fees – says poor people are disproportionately hit by these overdraft fees.

WMNF News interviewed Turner Lott, a campaign organizer with Florida PIRG; he says people can protect themselves against the fees.


“We found that banks that relied most heavily on overdraft revenue had more complaints to the Consumer Financial Protection Bureau (CFPB), which is a new federal agency that was designed to protect consumers in the financial marketplace. So, from our findings, it’s clear that we need to protect a strong CFPB to make sure that banks are following the law.”

Overdraft fees: that’s when you don’t enough money in your account to say, cover an ATM withdrawal or writing a check and then the bank will charge you a fee for that. How big of a problem is that?

“Correct. Yeah, that’s what’s happening. We found that 626 large banks reported collecting $8.4 Billion dollars in revenue from overdraft and non-sufficient funds, otherwise known as ‘NSF Fees’, which is an increase of 3.6% over the same period in 2015. The CFPB has expressed concerns over the marketing of these so-called overdraft protection policies and continues to study the problem.”

The Consumer Financial Protection Bureau. That’s a fairly new bureau in the federal government. What do you think might happen to it under the Trump administration?

“Well, we know that Donald Trump wants to dismantle the Dodd-Frank Act and the CFPB resulted from that act. He hasn’t come out and said anything about CFPB, but, we know that he has intentions to dismantle the act that created it. So, it’s not looking favorably for the CFPB, but, we’re trying to show the broad support with CFPB, especially at a local level, here in St. Petersburg. Our City Council passed a resolution in support of the CFPB’s Payday Loan Rules, in August.

“We’re just trying to show this ground-swell support for this much-needed agency.”

In 2010, regulators announced new overdraft protection rules. What are they?

“These rules prohibit banks from allowing overdraft on debit card and ATM transactions, unless the consumer has opted-in. Currently, the default is that you will be opted-out, unless you affirmatively opt-in or say ‘yes’ to the overdraft protection program and if you don’t say anything, you’re opted-out, but, as I said, you know a lot of people don’t realize that they opted-in, didn’t understand the terms because they are too complex, so they incur these fees without realizing that they are part of program.”

So, what can you do if you want to try to avoid these fees, I mean, besides keeping enough money in your account, what else can you do?

“We recommend everyone contact your bank or financial firm, see and just familiarize yourself with the overdraft protection program, see if your opted-in and if so, we encourage people would just opt-out, because we think it’s better to have your card declined, rather than pay up to $35 for an overdraft fee.”

What about Congress? Is there anything that Congress is working on to protect the consumers or what should they be watching out for in the next few months?

“I know that we anticipated sneak attacks in the budget and they’ve pushed the appropriations process back a little bit. So, what we did anticipate wasn’t, you know, good for consumers and so, we just want to make sure that they keep the CFPB in place and not only do they support it, but, they strengthen it because the CFPB has been a proven advocate for consumers.”

Is there anything else our listeners need to know about this issue?

“We found that banks that relied most heavily on overdraft fees had more complaints to the Consumer Financial Protection Bureau. So, from these findings it’s clear that we need to protect a strong CFPB against special-interest attacks.”