It’s been nearly a decade since the Consumer Financial Protection Bureau amended Regulation E and rolled out the rule that limits the ability for financial institutions to assess overdraft fees for ATM and one-time debit card transactions that overdraw consumers’ accounts. As Credit Union Times reported, this means that it’s time for the CFPB to review the rule and determine its effectiveness. After its review, the CFPB can:
- Allow the rule to stand as is with no changes
- Rescinded the rule altogether, or
- Change the rule
This rule requires consumers to opt-in before and overdraft can occur and related fees charged:
If a consumer attempts a one-time debit card transaction or an ATM withdrawal, the financial institution either authorizes or declines the transaction within seconds of the consumer’s request,” the bureau said, in explaining the rule. A declined transaction does not result in a fee. If the transaction is authorized, the financial institution will later settle the transaction, which might occur on the same day, or as long as three business days later.
In 2018, the bureau received about ten comments on the overdraft rule when the agency requested comment on all its rules.
The bureau also announced that it will begin the review of its rules under the Regulatory Flexibility Act to determine their impact on small entities.
The Bureau intends to commence the review roughly nine years after each rule’s publication.
The bureau is taking comments on the rule as a part of its review. You can find the request for comment here if you would like to make some suggestions.
Overview Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group