Attorney General Bonta to the U.S. House of Representatives: Protect American Consumers from Predatory Overdraft Fees

Why would we help the big banks at the expense of working people? 

OAKLAND — California Attorney General Rob Bonta today joined 23 attorneys general in sending a letter to the U.S. House of Representatives urging policymakers to reject an effort to overturn a Consumer Financial Protection Bureau (CFPB) rule that would protect American consumers from predatory overdraft fees. If allowed to take effect, this rule will limit overdraft fees to $5 and will save Americans struggling with high prices billions of dollars each year by preventing the largest banks from exploiting consumers in order to rake in profits. Last month, Attorney General Bonta issued a statement after the Senate voted to overturn this rule. 

“High overdraft fees serve no purpose other than to help the wealthy get wealthier, while American families who are already struggling get poorer. Banks aren’t shy about how these fees pad their wallets: a big bank CEO named his yacht Overdraft,” said Attorney General Bonta. “President Trump has promised to make life for Americans affordable — allowing expensive overdraft fees would do the complete and total opposite. Americans are counting on their elected leaders to protect them. My fellow attorneys general and I urge the House, the last line of defense, to protect its constituents’ wallets by voting “no” on the Resolution and preserving the CFPB’s overdraft rule.” 

The largest U.S. banks generate billions of dollars in profits by charging burdensome fees whenever customers overdraft their accounts. In 2023, banks generated $5.8 billion in revenue from overdraft fees. These fees average around $35 for each overdraft — and are applied even where the overdraft is minimal. For example, many consumers have reported paying overdraft charges of over $30 after purchasing a $5 cup of coffee. Overdraft fees are effectively extremely high-interest loans. Most overdrafts are less than $26 and are repaid within three days. That means overdraft protection with a typical $35 fee amounts to a loan with a 16,000% APR. 

Banks can manipulate the timing of deposits and withdrawals to maximize fees, charging customers even when they have enough money for an approved transaction. By creating significant barriers to maintaining a positive account balance, overdraft fees can contribute to involuntary account closures, thereby driving consumers out of the banking system altogether and damaging their credit. 

In submitting today’s letter, Attorney General Bonta joins the attorneys general of New York, Arizona, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Washington, Wisconsin, and the District of Columbia. 

Attorney General Bonta has been an outspoken advocate of the CFPB and its essential work protecting for American consumers and their financial future. 

• In February, Attorney General Bonta filed amicus briefs (here and here) in lawsuits challenging the Trump Administration’s efforts to dismantle the CFPB, arguing that the shuttering of the agency would cause catastrophic and irreparable harm to consumers nationwide.
• In April 2024, Attorney General Bonta supported a rule that would close a regulatory loophole that enables banks to extract billions of dollars from consumers by charging overdraft fees without adequately disclosing basic credit terms.
• In February 2024, Attorney General Bonta warned smaller banks and credit unions that overdraft fees disproportionally penalize lower-income consumers and consumers of color and may violate consumer protection laws.

A copy of the letter can be found here.