The Consumer Financial Protection Bureau (CFPB) is seeking approval from the Office of Management and Budget (OMB) to begin online testing of overdraft rules.

The CFPB announced in a notice in the Federal Register that it seeks approval to “explore consumer comprehension and decision-making in response to overdraft disclosure forms. It will also explore financial product usage, behavioral traits, and other consumer characteristics that may interact with a consumer’s experiences with overdraft programs and related disclosure forms.”

The online testing would examine ATM and overdraft rules and disclosures of 8,000 consumers.

The CFPB issued a report in August 2017 that included four prototypes of forms to use to convey overdraft rules and fees, and to confirm a consumer’s consent to collect such fees. Whether these forms would be used as a replacement to the current federally approved Regulation E model form is unclear.

The CFPB is a U.S. government agency that makes sure banks and other financial institutions treat consumers fairly.

Usually, an overdrawn checking account will result in an overdraft fee that is predetermined amount no matter how much you are overdrawn. The bank allows your balance to go into the negative, but will charge you a fee to cover the transaction that sent the account into overdrawn status. The bank usually will take the repayment out of your next deposit, according to their own overdraft rules.

Most financial institutions will allow several overdraft fees to incur in a single 24-hour period if circumstances exist.

The CFPB explains that most of the time, a bank can’t charge fees on ATM or debit card transactions unless you have agreed to these fees. The act of agreeing to such fees is often referred to “opting in” to such a program’s overdraft rules. Such coverage will allow you to make debit card purchases and ATM withdrawals even if your account does not have enough money to cover the amount of the transactions. You will incur fees as a result of going negative in the account.

Any consumer who has not opted in to ATM and debit card overdraft protection will see a transaction declined if not enough funds sit in the account to cover the transaction.

A 2014 CFPB report indicated that consumers who have opted in for ATM and debit card overdraft protection are three times more likely to incur more than 10 overdrafts per year opposed to accounts that have not opted in. Those with opted-in accounts accumulate seven times as many overdraft fees than consumers who do not have their accounts covered by overdraft rules.

As banks and other financial institutions have created a variety of overdraft rules that vary according to their protection plans, the CFPB wants to ensure that consumers understand their choices and the consequences of those choices.

Banks such as HSBC Bank and Capital One make millions of dollars by collecting overdraft fees. Whether or not the practices are fair and clear is under investigation. Bank customers who believe they may have been affected may qualify to participate in this free investigation.

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