- California AG Rob Bonta issued letters to small banks and credit unions warning that overdraft and returned deposited item fees likely violate the state’s Unfair Competition Law and the federal Consumer Financial Protection Act.
- In the letters, which were sent to institutions holding assets under $10 billion, AG Bonta urges the institutions to review their policies and practices regarding surprise overdraft fees and returned deposited item fees, highlighting the disproportionate impact of such fees on California’s most vulnerable populations.
- The letters note that overdraft fees often cannot be reasonably anticipated by consumers due to the complexity of how transactions are processed and the lag time between transactions. Additionally, the letters underscore the issue that consumers usually have no knowledge or control over the circumstances that lead to checks being returned, resulting in deposited item fees.
- The CFPB has recently put forward a proposed rule aimed at addressing a regulatory loophole concerning overdraft fees, which we previously covered here.