For many years, banks heavily marketed debit cards and automatically enrolled customers in overdraft protection plans.
The subsidiaries were accused of inaccurate or misleading disclosures about overdraft protection programmes.
That led a number of banks to launch aggressive campaigns to convince customers to sign up for overdraft protection.
Last year, the Federal Reserve barred banks from offering overdraft protection on debit card transactions without prior consent from consumers.
Some banks, including Bank of America and JP Morgan Chase, have recently announced that they are reducing their overdraft protection fees.
Before these new rules, most banks automatically added courtesy overdraft protection to checking accounts with details and fees in the fine print.
The Overdraft Protection Act would limit overdraft coverage fees in various ways.
Should banks be allowed to automatically enroll customers into overdraft protection programs?
Many banks offer an overdraft protection program that either draws funds from your savings automatically or links to an overdraft line of credit.
In July 2010, the Federal Reserve required banks to receive permission from each checking account customer before the bank provided overdraft protection for ATM and debit card transactions.
Also more banks automatically enroll you in overdraft protection programs.
The Federal Reserve announced new rules on Thursday that will prohibit banks from automatically enrolling customers in so-called overdraft protection programs, which charge high fees for exceeding the balance in an account.
It decided not to test a plan in which customers who were about to make a debit-card purchase but didn't have enough in their account would have gotten an alert giving them the option of buying overdraft protection.
There was such an uproar over it that federal banking regulators instituted new rules, forcing many banks to alter their policies on overdrafts and requiring them to get a customer's consent to overdraft protection instead of automatically offering it.
The New York Times, meanwhile, wondered why anyone would opt-in for overdraft protection, and reported on a study by Vanguard that showed that men were more likely to sell their stocks at market lows during the 2008 financial crisis.
FORBES: Money Monday: The Best Personal Finance Stories from the Weekend
Some banks are ramping up their pitches for overdraft-protection services.
JPMorgan Chase, Wells Fargo, PNC, Bank of America, and five other banks are currently under investigation for persuading customers to opt into expensive overdraft-protection programs without always being made aware of cheaper alternatives.
It wants to ensure they do not become the latest case of widespread mis-selling, following the payment protection insurance (PPI) and overdraft charges sagas.
"The final overdraft rules represent an important step forward in consumer protection, " Federal Reserve Chairman Ben S. Bernanke said in a statement.
The Consumer Financial Protection Bureau formally announced this week that it will investigate the overdraft fees that banks charge on checking accounts.
And there may be more limitations on the way as the Consumer Finance Protection Bureau recently launched an inquiry asking banks for data about their overdraft practices.
FORBES: Subprime Lending Is Back, And That's Not Such A Bad Thing
应用推荐