Under changes announced Tuesday, the San Francisco company will provide a one-day grace period on overdraft fees to its direct deposit customers. It also eliminated overdraft fees on all transactions of under $5.
House Democrats are lobbying for a bill to reform the way banks charge overdraft fees, but recognizing that Republicans are unlikely to take up the legislation, they are hoping the CFPB can act on its own.
But the Wayzata, Minn., company is not out of legal hot water, as a judge let stand some charges that it violated a provision in the Dodd-Frank Act that prohibits using deceptive practices to sell consumer products.
Revenue from overdrafts keeps rising, according to new FDIC data, even though the controversial product still has a bull’s-eye on its back. Clearer disclosures and higher consumer confidence are the big reasons.
The San Francisco bank is embroiled in a high-stakes legal battle over the use of arbitration in disputes involving overdraft fees at the same time that adversaries are portraying the scandal-plagued bank as the poster child for why reform is necessary.