ICBA: CFPB’s overdraft rule must be enjoined and overturned

ICBA said the Consumer Financial Protection Bureau’s overdraft rule is likely to negatively affect consumers and their access to banking services and should be legally stopped.

Details: In a joint amicus brief in support of a motion for a preliminary injunction against the CFPB's overdraft rule, ICBA said the rule:

• Contradicts decades of regulatory practice and interpretation by reclassifying discretionary overdraft protection services as credit.

• Will harm consumers who depend on overdraft protection to purchase necessities when facing temporary cash flow shortfalls.

• Will leave consumers with fewer, more expensive options to purchase those necessities.

• Will limit access of low-income consumers to banking services.

Background: On Dec. 12, 2024, the CFPB issued a final overdraft rule that classified discretionary overdraft protection services offered by financial institutions with more than $10 billion in assets as “credit” under the Truth in Lending Act. It also required banks that opt not to reduce overdraft fees to artificially low levels to convert discretionary overdraft protection services to a credit product.

ICBA Response: In a national press release last month, ICBA said it strongly opposes the rule, which would harm customers and businesses that rely on overdraft services and force consumers to rely on payday lenders and other unscrupulous funding sources. In a comment letter last year, ICBA urged the CFPB to withdraw the proposal.

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