CFPB Issues Final Rule on Overdraft Fees

Regulatory Developments

CFPB Issues Final Rule on Overdraft Fees
On December 12, the CFPB issued a final rule amending Regulations E and Z to treat overdraft products as credit subject to Regulation Z, unless the overdraft fee is capped at $5 or an amount that covers a financial institution’s costs and losses. Institutions that continue extending profit-generating overdraft loans will need to comply with Regulation Z’s requirements for loans, including giving consumers a choice on whether to open a line of overdraft credit account, providing account-opening disclosures, sending periodic statements, and allowing consumers to decide whether to pay automatically or manually. The final rule also applies all the credit card provisions of Regulation Z to covered overdraft credit, if the credit account can be accessed by a hybrid debit-credit card. The final rule applies only to insured depository institutions, insured credit unions, and their affiliates, with more than $10 billion in assets and is set to take effect on October 1, 2025.

CFPB Seeks Public Comment on Effects of Inaccurate Credit Reporting and Financial Abuse on Vulnerable Populations In Advance of New Rulemaking
On December 9, the CFPB issued an ANPR seeking public comment on inaccurate credit reporting affecting survivors of domestic violence, elder abuse, and other forms of financial abuse, including non-consensual financial obligations incurred through abuse or coercion. Specifically, the CFPB is considering expanding the definitions of “identity theft” and “identity theft report” in Regulation V to include information stemming from transactions that occur without a consumer’s effective consent. The ANPR covers topics including the prevalence of coerced debt, how the current consumer reporting system contributes to or alleviates harm, and possible solutions, including self-attestation or presumptions of coercion for victims. The ANPR also explores how amendments to Regulation V could reduce barriers faced by vulnerable populations, such as domestic violence survivors, woman of color, older Americans, and foster youth, while establishing appropriate safeguards and documentation standards. Comments may be submitted before March 7, 2025.

Federal Reserve Clarifies Application of Account Access Guidelines
On December 9, the Federal Reserve issued a technical clarification, stating that its account access guidelines apply to EBAs – limited purpose accounts established by a Federal Reserve Bank to maintain the reserve balances of eligible institutions and typically managed by an agent for the participating institutions. The Federal Reserve’s clarification is intended to convey that the same standard of review will be applied to any institution requesting access to Federal Reserve accounts and services, including EBAs.

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