WASHINGTON - The American Bankers Association refuted a study released this week that concluded banks could trick customers out of huge amounts of interest if Truth-in-Savings restrictions were lifted.

Nessa Feddis, the ABA's senior federal counsel, disputed the study's basic premise - that Congress plans to repeal the law, which governs how banks calculate and advertise interest rates.

Legislation pending in Congress would streamline a number of regulations, but does not repeal Truth-in-Savings.

Ms. Feddis added that allegations that banks would use gimmicks to reduce interest payments were unfounded as well.

"The whole study is based on an assumption that doesn't exist in any bill that I'm aware of," Ms. Feddis said.

Michelle Meier, Consumers Union's counsel for government affairs, who wrote the study, did not return a call for comment.

In the study, Ms. Meier argued that banks, free of Truth-in-Savings' restrictions, could use two gimmicks to achieve lower interest payments.

She said banks could pay a higher, advertised rate on only a portion of the account balance, with the rest subject to a lower rate.

Banks also could pay interest on the lowest balance in the account during a particular month, she said. Current law requires banks to pay interest on the average daily balance.

Ms. Meier, whose group publishes Consumer Reports, said banks in both cases would pay lower interest rates than those advertised. Banks could pocket between $300 million to $600 million, she said.

"Congress is acting like the Grinch that stole Christmas," Ms. Meier said. "Congress is moving legislation that allows banks to return to the days when they purposely deceived and cheated customers."

"Removing fair advertising protections for consumers is wrong, and it costs all of us dearly," she added.

But ABA spokeswoman Charlotte Birch said the study amounted to nothing more than a "scare tactic."

"Consumers Union is so desperate to come up with Grinch-like numbers making banks look like bad guys that they came up with bad numbers and created a faulty premise," Ms. Birch said. "They're totally misleading consumers."

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