Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra said the regulator plans to enhance its scrutiny of banks that are “heavily dependent” on overdraft fees, hinting at enforcement actions that could follow.

Why should we care?
Overdraft fees have been the subject of criticism from fintechs, consumer advocates and regulators on account of their predatory nature. In a move lauded by consumer advocates, Capital One last week announced that it was eliminating overdraft fees. “...banks are still dependent on overdraft, we know that banks understand that they need to kick this addiction,” wrote Chopra in a statement. CFPB research found that overdraft fee revenue in the industry amounted to $15.5B in 2019. The CFPB, per Chopra’s statement, will take action against large financial institutions whose overdraft practices violate the law. The regulator is also considering additional policy guidance clarifying unlawful practices. In addition, Chopra has asked the CFPB’s bank examiners to prioritize examinations of banks that are heavily reliant on overdraft. Some banks, however, took issue with the CFPB’s numbers. “The CFPB’s numbers don’t reflect changes we made earlier this year to our overdraft services, which have already helped 1.7 million customers," a JPMorgan Chase spokesperson was quoted as saying.