Public Airs Grievances Against Banks at CFPB Forum

Joan Ferreira had a suggestion for the Consumer Financial Protection Bureau about how banks can improve the explanations of their overdraft protection services.

"You need to use simple text to explain overdraft fees," Ferreira said Wednesday evening during the public testimony portion of a town hall forum hosted by the CFPB in New York.

"Are you willing to pay $40 to pay for a cup of coffee? If they say no, guess what? They are opting out," he added, drawing some of the loudest applause of the night from the rest of the audience.

Ferreira referred to a frequently used example about how a consumer can end up spending $40 for a $5 cup of coffee. The customer overdraws the account instead of being declined when paying for the coffee, triggering overdraft fees. CFPB Director Richard Cordray invoked the same example during his opening remarks at the forum, which the agency used to invite feedback from consumers about their checking experiences.

The CFPB said earlier on Wednesday that it will examine the policies, terms and marketing of banks' overdraft protection practices, such as whether customers understand that they can decline having overdraft protection on their checking account.

Attendees were encouraged to share both positive and negative stories, but almost all of the comments were unflattering as participants railed against banks, payday loan providers and other businesses that they said had wronged them.

Ferreira, who is a senior financial adviser with Neighborhood Trust Financial Partners, a group that provides free financial advice for low-income New Yorkers, said that he selected his career path because of an experience he had in college with overdraft fees. Audience members let out low whistles and murmurs as he explained that he accidentally incurred 10 overdraft fees once.

"I had to spend a whole month in college eating Ramen noodle soup," Ferreira said.

More than a dozen people like Ferreira commented during the public testimony portion of the evening. While the CFPB said at the beginning that the meeting was to hear about checking account experiences, participants seemed to have other concerns on their minds. Many of the questions and comments posed to Cordray centered on other areas, like problems with fees on prepaid cards and concerns over student loans.

Participants also took shots at Wal-Mart Stores Inc. The retail giant offers services like cashing paychecks and the prepaid card MoneyCard. One commenter, who said she was a member of the Retail Action Project, a labor advocacy group for retail workers, asked what role Cordray saw for the CFPB in regulating the store.

The CFPB was carefully considering the issue, Cordray said.

"If the merchant is engaged in providing financial products and services, then we do have the authority to look into the issues and to potentially act and take enforcement action if it is appropriate," he said.