Overdraft Protection Act of 2009 - Amends the Truth in Lending Act to prohibit a depository institution from engaging in unfair or deceptive acts or practices in connection with overdraft coverage, or in acts designed to evade the provisions of this Act.
Requires each depository institution that provides overdraft coverage for transaction accounts to clearly and conspicuously disclose overdraft coverage fees.
Subjects overdraft coverage fees to the consumer's written, electronic, or other consent.
Requires a depository institution to provide specified consumer disclosures regarding its overdraft protection program, including: (1) periodic statements for any transaction account that has an overdraft coverage program feature; and (2) prompt notification of the account's overdraft status.
Prescribes overdraft coverage fee limits.
Prohibits an overdraft coverage fee if the overdraft results solely from a debit hold amount that exceeds the actual dollar amount of the transaction.
Requires a depository institution to provide consumers who have not consented to participate in an overdraft coverage program transaction accounts with the same terms as those provided to consumers who have consented to participate in such program.
Prohibits a depository institution from charging a non-sufficient fund fee for any transaction at an automated teller machine, or a debit card transaction.
Prohibits a depository institution from reporting negative information regarding consumer use of overdraft coverage to any consumer reporting agency when the overdraft amounts and coverage fees are paid under the terms of an overdraft coverage program.
[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3904 Introduced in House (IH)]
111th CONGRESS
1st Session
H. R. 3904
To amend the Truth in Lending Act to establish fair and transparent
practices related to the marketing and provision of overdraft coverage
programs at depository institutions, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 22, 2009
Mrs. Maloney (for herself, Mr. Frank of Massachusetts, Ms. Waters, Mr.
Maffei, Mr. Miller of North Carolina, Mr. Hinojosa, Ms. Moore of
Wisconsin, Mr. Hodes, Mr. Capuano, Mr. Ackerman, Mr. Kanjorski, Mr.
Ellison, Mr. Gutierrez, Ms. Speier, Ms. Eshoo, and Mr. Jones)
introduced the following bill; which was referred to the Committee on
Financial Services
_______________________________________________________________________
A BILL
To amend the Truth in Lending Act to establish fair and transparent
practices related to the marketing and provision of overdraft coverage
programs at depository institutions, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Overdraft Protection Act of 2009''.
SEC. 2. FINDINGS AND PURPOSE.
Section 102 of the Truth in Lending Act (15 U.S.C. 1601) is amended
by adding at the end the following new subsection:
``(c) Fairness and Accountability in Overdraft Coverage.--
``(1) Findings.--The Congress also finds that--
``(A) overdraft coverage is a form of short-term
credit that depository institutions provide for
consumer transaction accounts. Historically, depository
institutions covered overdrafts for a fee on an ad hoc
basis;
``(B) with the growth in specially designed
software programs and in consumer use of debit cards,
overdraft coverage for a fee has become more prevalent;
``(C) most depository institutions do not notify
consumers when adding this feature to their transaction
accounts, and some do not permit consumers to eliminate
this feature from such accounts;
``(D) most depository institutions collect a high
flat fee, including for small dollar transactions, each
time the institution covers an overdraft, in some cases
impose multiple overdraft coverage fees within a single
day, and many charge additional fees for each day
during which the account remains overdrawn; and
``(E) such abusive and misleading practices in
connection with overdraft coverage fees have deprived
consumers of meaningful choices about their accounts
and placed significant financial burdens on low- and
moderate-income consumers.
``(2) Purpose.--It is the purpose of this title to protect
consumers by limiting abusive and misleading overdraft coverage
fees and practices, and by providing meaningful disclosures and
consumer choice in connection with overdraft coverage fees.''.
SEC. 3. DEFINITIONS.
(a) Additional Definitions.--Section 103 of the Truth in Lending
Act (15 U.S.C. 1602) is amended by adding at the end the following new
subsection:
``(cc) Definitions Relating to Overdraft Coverage.--
``(1) Check.--The term `check' has the same meaning as in
section 3(6) of the Check Clearing for the 21st Century Act (12
U.S.C. 5001 et seq.), other than a travelers check.
``(2) Depository institution.--The term `depository
institution' has the same meaning as in clauses (i) through
(vi) of section 19(b)(1)(A) of the Federal Reserve Act (12
U.S.C. 461(b)(1)(A)).
``(3) Nonsufficient fund fee.--The term `nonsufficient fund
fee' means a fee or charge assessed in connection with an
overdraft for which a depository institution declines payment.
``(4) Overdraft.--The term `overdraft' means the amount of
a withdrawal by check or other debit from a transaction account
in which there are insufficient or unavailable funds in the
account to cover such check or debit.
``(5) Overdraft coverage.--The term `overdraft coverage'
means the payment of a check presented or other debit posted
against a transaction account by the depository institution in
which such account is held, even though there are insufficient
or unavailable funds in the account to cover such checks or
other debits.
``(6) Overdraft coverage fee.--The term `overdraft coverage
fee' means any fee or charge assessed in connection with
overdraft coverage, or in connection with any negative account
balance that results from overdraft coverage, unless such fee
or charge is imposed in connection with--
``(A) an extension of credit through an overdraft
line of credit program where such fee or charge was
considered a finance charge under this title as in
effect immediately prior to the enactment of the
Overdraft Protection Act of 2009; or
``(B) any transfer from an account linked to
another transaction account.
Such fee shall be considered a `finance charge' for purposes of
section 106(a), but shall not be included in the calculation of
the rate of interest for purposes of section 107(5)(A)(vi) of
the Federal Credit Union Act (12 U.S.C. 1757(5)(A)(vi))
``(7) Overdraft coverage program.--The term `overdraft
coverage program' means a service under which a depository
institution assesses an overdraft coverage fee for overdraft
coverage.
``(8) Transaction account.--The term `transaction account'
has the same meaning as in section 19(b)(1)(C) of the Federal
Reserve Act (12 U.S.C. 461(b)(1)(C)).''.
(b) Conforming Amendment.--Section 107(5)(A)(vi) of the Federal
Credit Union Act (12 U.S.C. 1757(5)(A)(vi)) is amended by inserting ``,
other than an overdraft coverage fee, as defined in section 103(cc) of
the Truth in Lending Act (12 U.S.C. 1602(cc))'' after ``inclusive of
all finance charges''.
SEC. 4. FAIR MARKETING AND PROVISION OF OVERDRAFT COVERAGE PROGRAMS.
Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is
amended by adding at the end the following new section:
``SEC. 140B. OVERDRAFT COVERAGE PROGRAM DISCLOSURES AND CONSUMER
PROTECTION.
``(a) Prohibitions.--No depository institution may engage in acts
or practices in connection with the marketing of or the provision of
overdraft coverage that are unfair, deceptive, or designed to evade the
provisions of this section.
``(b) Marketing Disclosures.--Each depository institution that
provides or offers to provide overdraft coverage with respect to
transaction accounts held at that depository institution shall clearly
and conspicuously disclose in all marketing materials for such
overdraft coverage any overdraft coverage fees.
``(c) Consumer Consent Opt-In.--A depository institution may charge
overdraft coverage fees only if the consumer has consented in writing,
in electronic form, or in such other form as is permitted under
regulations of the Board.
``(d) Consumer Disclosures.--Each depository institution shall
clearly disclose to each consumer covered by an overdraft protection
program of that depository institution--
``(1) that--
``(A) the consumer may be charged for not more than
one overdraft coverage fee in any single calendar month
and not more than 6 overdraft coverage fees in any
single calendar year, per transaction account; and
``(B) the depository institution retains the
discretion to pay (without assessing an overdraft
coverage fee) or reject overdrafts incurred by the
consumer beyond the numbers described in subparagraph
(A);
``(2) information about any alternative overdraft products
that are available, including a clear explanation of how the
terms and fees for such alternative services and products
differ; and
``(3) such other information as the Board may require, by
rule.
``(e) Periodic Statements.--Each depository institution that offers
an overdraft coverage program shall, in each periodic statement for any
transaction account that has an overdraft coverage program feature,
clearly disclose to the consumer the dollar amount of all overdraft
coverage fees charged to the consumer for the relevant period and year
to date.
``(f) Exclusion From Account Balance Information.--No depository
institution may include the amount available under the overdraft
coverage program of a consumer as part of the transaction account
balance of that consumer.
``(g) Prompt Notification.--Each depository institution shall
promptly notify consumers, through a reasonable means selected by the
consumer, when overdraft coverage has been accessed with respect to the
account of the consumer, not later than on the day on which such access
occurs, including--
``(1) the date of the transaction;
``(2) the type of transaction;
``(3) the overdraft amount;
``(4) the overdraft coverage fee;
``(5) the amount necessary to return the account to a
positive balance; and
``(6) whether the participation of a consumer in an
overdraft coverage program will be terminated if the account is
not returned to a positive balance within a given time period.
``(h) Terminated or Suspended Coverage.--Each depository
institution shall provide prompt notice to the consumer, using a
reasonable means selected by the consumer, if the institution
terminates or suspends access to an overdraft coverage program with
respect to an account of the consumer, including a clear rationale for
the action.
``(i) Notice and Opportunity To Cancel.--Each depository
institution shall--
``(1) warn any consumer covered by an overdraft coverage
program who engages in a transaction through an automated
teller machine or a branch teller if completing the transaction
would trigger overdraft coverage fees, including the amount of
the fees; and
``(2) provide to the consumer the opportunity to cancel the
transaction before it is completed.
``(j) Overdraft Coverage Fee Limits.--
``(1) Frequency.--A depository institution may charge not
more than one overdraft coverage fee in any single calendar
month, and not more than 6 overdraft coverage fees in any
single calendar year, per transaction account.
``(2) Reasonable and proportional overdraft coverage
fees.--
``(A) In general.--The amount of any overdraft
coverage fee that a depository institution may assess
for paying a transaction (including a check or other
debit) shall be reasonable and proportional to the cost
of processing the transaction.
``(B) Safe harbor rule authorized.--The Board, in
consultation with the Comptroller of the Currency, the
Board of Directors of the Federal Deposit Insurance
Corporation, the Director of the Office of Thrift
Supervision, and the National Credit Union
Administration Board, may issue rules to provide an
amount for any overdraft coverage fee that is presumed
to be reasonable and proportional to the actual cost of
processing the transaction.
``(3) Posting order.--In order to minimize overdraft
coverage fees charged to consumers, each depository institution
shall post transactions with respect to transaction accounts in
such a manner that the consumer does not incur avoidable
overdraft coverage fees.
``(k) Debit Holds.--No depository institution may charge an
overdraft coverage fee on any category of transaction, if the overdraft
results solely from a debit hold amount placed on a transaction account
that exceeds the actual dollar amount of the transaction.
``(l) Nondiscrimination for Not Opting in.--In implementing the
requirements of this section, each depository institution shall provide
to consumers who have not consented to participate in an overdraft
coverage program, transaction accounts having the same terms,
conditions, or other features as those that are provided to consumers
who have consented to participate in such overdraft coverage program,
except for features of such overdraft coverage.
``(m) Nonsufficient Fund Fee Limits.--No depository institution may
charge any nonsufficient fund fee with respect to--
``(1) any transaction at an automated teller machine; or
``(2) any debit card transaction.
``(n) Reports to Consumer Reporting Agencies.--No depository
institution may report negative information regarding the use of
overdraft coverage by a consumer to any consumer reporting agency (as
that term is defined in section 603 of the Fair Credit Reporting Act
(15 U.S.C. 1681a)) when the overdraft amounts and overdraft coverage
fees are paid under the terms of an overdraft coverage program.
``(o) Rule of Construction.--No provision of this section may be
construed as prohibiting a depository institution from retaining the
discretion to pay, without assessing an overdraft coverage fee or
charge, an overdraft incurred by a consumer.''.
SEC. 5. REGULATORY AUTHORITY OF THE BOARD.
(a) In General.--Not later than 9 months after the date of the
enactment of this Act (except as provided in subsection (b)), the Board
of Governors of the Federal Reserve System (hereafter in this Act
referred to as the ``Board''), in consultation with the Comptroller of
the Currency, the Board of Directors of the Federal Deposit Insurance
Corporation, the Director of the Office of Thrift Supervision, and the
National Credit Union Administration Board, shall issue such final
rules and publish such model forms as necessary to carry out section
140B of the Truth in Lending Act, as added by this Act.
(b) Board Authority Regarding Additional Warnings.--The Board may,
by rule, after taking into account the findings of the Comptroller
General of the United States under section 6, require warnings at
locations such as point-of-sale transfer terminals or other locations,
that are similar to those required under section 140B(i) of the Truth
in Lending Act, as added by this Act, where feasible, and if the cost
of providing such warnings does not outweigh the benefit to consumers.
SEC. 6. STUDY AND REPORT BY THE GAO.
(a) Study.--
(1) In general.--The Comptroller General of the United
States shall conduct a study regarding whether it is feasible
for a depository institution--
(A) to provide a warning to a consumer at a point-
of-sale transfer terminal that completing a transfer
may trigger overdraft coverage fees; and
(B) to provide the consumer with the opportunity to
cancel the point-of-sale transfer before the
transaction is completed.
(2) Considerations.--In conducting the study under this
subsection, the Comptroller General shall evaluate--
(A) the benefits to consumers of a point-of-sale
transfer overdraft warning and opportunity to cancel;
(B) the availability of technology to provide such
a warning and opportunity; and
(C) the cost of providing such warning and
opportunity.
(b) Report to Congress.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General shall submit a report to
Congress on the results of the study conducted under subsection (a).
(c) Definitions.--As used in this section, the terms ``overdraft
coverage program'', ``overdraft coverage fee'', and ``depository
institution'' have the same meanings as in section 103(cc) of the Truth
in Lending Act, as added by this Act.
SEC. 7. EFFECTIVE DATE.
(a) In General.--This Act and the amendments made by this Act shall
take effect 1 year after the date of the enactment of this Act, whether
or not the rules of the Board under this Act or such amendments are
prescribed in final form.
(b) Moratorium on Fee Increases.--
(1) In general.--During the 1-year period beginning on the
date of the enactment of this Act, no depository institution
may increase the overdraft coverage fees or charges assessed on
transaction accounts for paying a transaction (including a
check or other debit) in connection with an overdraft or for
nonsufficient funds.
(2) Definitions.--As used in this section, the terms
``depository institution'', ``overdraft'', ``overdraft coverage
fee'', ``transaction account'' and ``nonsufficient fund fee''
have the same meanings as in section 103(cc) of the Truth in
Lending Act, as added by this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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