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January 17, 2024

CFPB Rule Will Prevent Banks from Gouging Their Customers with Excessive Overdraft Fees, While Providing Compliance Options

WASHINGTON, D.C.—Stephen Hall, Legal Director and Securities Specialist, issued the following statement on the rule proposal issued by the Consumer Financial Protection Bureau (CFPB) to limit excessive overdraft fees:

“For too long, banks have been gouging their customers with overdraft fees that fall through the gaps in current laws governing credit. It has become a major profit generator for the banks, representing billions of dollars a year in revenue, and it comes at the expense of customers with no real power to push back. This proposal is a major step toward updating the rules and putting a stop to these unfair practices, saving consumers an estimated $3.5 billion or more in fees every year.

“The rule will apply only to the large banks with assets over $10 billion. It’s also noteworthy because it would give those banks compliance choices.  They will be able to recoup their costs as long as their fees are reasonable and proportionate to their actual costs. Alternatively, the banks may use a predetermined benchmark fee structure that will be in the final rule.  And they will also have the option to set up credit arrangements with their customers for overdraft protection, provided they comply with the Truth-in-Lending-Act requirements that ensure transparency for credit terms.

“We look forward to delving into the proposal in more detail, but it’s clear that the CFPB should be commended for taking another step as the champion of financial consumers who are often at the mercy of the large banks.”


Better Markets is a non-profit, non-partisan, and independent organization founded to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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