The Pew Charitable Trusts is looking into whether overdraft reform is necessary for credit union and bank overdraft fees.

While some banking representatives question whether the Consumer Financial Protection Bureau needs to propose new rules aimed at making banks and other financial institutions more transparent, many Americans support developing additional regulations. Pew Charitable Trusts has been researching the issue since 2010.

Federal regulations state that banks cannot charge overdraft fees if their consumers have not given their fully informed consent prior to the overdraft charges.

During its research, however, Pew found that over half of the people who incurred a debit card overdraft fee didn’t realize they had opted into the overdraft coverage, raising questions about the effectiveness of the opt-in provision.

A Pew survey reported that overdrafters paid fees averaging $69 in their latest overdraft. Half of the people surveyed paid between $30 and $100. The majority of overdrafters had a negative account balance for four or less days.

Overdraft coverage is a service provided by many banks and credit unions that allows consumers to make transactions even if there are insufficient funds to cover those transactions in the consumer’s bank account.

Overdraft Fees Are Big Business

According to a Pew study of 42 of the largest U.S. banks, financial institutions that had ATM and debit overdraft fees reported 400 percent more revenue, generated from overdraft fees, than banking institutions that do not collect overdraft fees. In the first six months of 2015, banks around the nation collected over $2.4 billion in overdraft fees.

Consumer advocates asking for banking reform are requesting changes to the regulations that would require the clear disclosure of terms and conditions on banking overdraft policies. Advocates also believe the Consumer Financial Protection Bureau should regulate overdraft penalties and require the fees to be reasonable and proportional to the bank’s costs of covering the overdraft charges.

The Consumer Financial Protection Bureau is currently looking at overdraft fee practices and may release new rules sometime over the next year.

Overdraft Fee Investigation

Consumer protection attorneys are currently investigating credit unions across the country for their overdraft fee agreements and are available to help consumers wishing to bring a credit union overdraft fee class action lawsuit.

Some of the credit unions being investigated include State Employees Credit Union, Alliant Credit Union, Star One Credit Union, America First Credit Union, and many more.

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