About 45% of consumers considered heavy overdrafters opted in for the service after the opt-in rule was passed in 2010, but the adoption rates varied widely across banks, suggesting that some banks marketed the service more aggressively.
"Consumers need to be able to anticipate and avoid unnecessary fees on their checking accounts. But we are concerned that some overdraft practices may increase consumer costs beyond reasonable expectations," said CFPB Director Richard Cordray in a press release. "What is marketed as overdraft protection can, in some instances, create greater risk of consumer harm."
Overdraft fees account for 60% of fees from consumer checking accounts on an average. While nothing in the report suggests that banks should be precluded from offering overdraft coverage, the CFPB said it would dig in further to understand the reason behind the varying bank practices and whether they were harming customer interests.
-- Written by Shanthi Bharatwaj from New York
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts