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Consumer-advocacy groups are urging bank customers to write to the Federal Reserve Board to express their support for a proposed new rule that would require banks to get consumers' permission before covering overdrafts from ATM withdrawals and debit card purchases and imposing fees for that service. The Washington, D.C.-based Consumer Federation of America, the Boston-based National Consumer Law Center and the Durham, N.C.-based Center for Responsible Lending are among the organizations that say consumers pay billions annually in ATM and debit card overdraft fees they did not authorize. These fees can amount to as much as $35 per overdraft, the groups say. The Fed last week said it is seeking public comment on proposed new regulations that would require financial institutions to take one of two approaches to handle ATM and debit card overdrafts. The first approach maintains the status quo by requiring banks to permit consumers to opt out of costly overdraft protections. The second approach, which the consumer groups consider to be fairer, would require banks to get consumers' permission before covering overdrafts, which can trigger fees. The proposed rules also would prohibit institutions from imposing an overdraft fee when a debit card account is overdrawn because of a hold placed on funds from an earlier transaction that has not yet settled in the consumer's account that exceeds the transaction amount. "Consumers should have the right to decide whether they want to pay a $35 fee to buy a $5 hamburger," Eric Halperin, director of the Center for Responsible Lending, said this week in a statement. The Fed on Dec. 18 withdrew rules it proposed last May to address overdraft issues for checking, ATM and debit card accounts and issued new proposed rules focused solely on ATM and debit card overdraft fees. The Fed last week said it expects the proposed rules soon. The comment period would then last 60 days.
