California Attorney General Rob Bonta issued a statement after Congress overturned a Consumer Protection Financial Bureau (CFPB) rule that would have limited overdraft fees to $5. Currently, banks usually charge $35 for an overdraft. The rule was expected to have saved Americans billions of dollars each year.
“Congress just voted to increase bank fees, overturning a CFPB rule that would have saved hardworking American families billons a year — this directly harms consumers already struggling with affordability and the ripples of inflation,” said Attorney General Bonta. “Let me be clear: by allowing big banks to charge high overdraft fees, Congress is paving the way for wealthy banks to get wealthier, and for working class people to be squeezed even further.”
Overdraft fees can lead to substantial financial losses for families and turn setbacks into crises. California consumers paid an estimated $200 million in overdraft fees in 2022, with the financial burden disproportionately falling on low-income consumers and consumers of color. Meanwhile, financial institutions nationwide generated over $7.7 billion in revenue from overdraft fees and non-sufficient funds fees in 2022.
Attorney General Bonta has been a steadfast advocate for consumer protections, including limiting overdraft fees.
- Last month, Attorney General Bonta filed amicus briefs (here and here) in lawsuits challenging the Trump Administration’s efforts to dismantle the CFPB, arguing that the shuttering of the agency would cause catastrophic and irreparable harm to consumers nationwide.
- In April 2024, Attorney General Bonta supported a rule that would close a regulatory loophole that enables banks to extract billions of dollars from consumers by charging overdraft fees without adequately disclosing basic credit terms.
- In February 2024, Attorney General Bonta warned smaller banks and credit unions that overdraft fees disproportionally penalize lower-income consumers and consumers of color, and may violate consumer protection laws.