Warren, Booker, Maloney Blast JPMorgan Chase, Bank of America, and Wells Fargo for Continuing to Profit From Overdraft Fees that Target Low-Income Americans
The Three Banks Raked in Almost Half of All Big Bank Overdraft and Non-Sufficient Fund Fees in 2019
Washington, D.C. – U.S. Senator Elizabeth Warren (D-Mass.), a member of the Senate Banking, Housing, and Urban Affairs Committee, Senator Cory Booker (D-N.J.), and Representative Caroline Maloney (D-N.Y) sent letters to JPMorgan Chase, Bank of America, and Wells Fargo, calling on them to end their use of overdraft fees, which disproportionately harm low-income Americans. Collectively, the three banks accounted for 44% of overdraft and non-sufficient fund fees collected by big banks in 2019. As several banks have moved to end overdraft fees, the lawmakers are calling on JPMorgan Chase, Bank of America, and Wells Fargo to follow suit and answer a series of questions about their overdraft fee policies and consumer protections.
“Overdraft fees are one of the ‘most common exploitative mechanisms big banks use to target the poor’... Overall, the discrepancies in who pays overdraft fees, and how heavily the penalties are levied against them, amount to a ‘tax on the poor, an extraction from the country’s poorest Americans to its wealthiest banks,’” wrote the lawmakers.
Overdraft fees disproportionately affect low-income consumers. According to the Consumer Financial Protection Bureau, 79% of all overdraft and non-sufficient funds fees were levied against only 9% of account holders, and one study found that most consumers who paid overdraft fees, and more than 80% of “heavy overdrafters,” had trouble meeting regular financial obligations within the last year.
During the pandemic, big bank profits from overdraft fees soared. In the fourth quarter of 2020, banks collected $2.3 billion in overdraft fees – a 64% spike from the second quarter of that same year. JPMorgan Chase raked in more than seven times as much in overdraft fees per account than other competitors, charging a total of $1.5 billion in overdraft fees in 2020.
In recent months, several big financial institutions have moved to eliminate or reduce overdraft fees, and at least two major banks announced the complete repeal of overdraft fees. The lawmakers are calling on the three banks to repeal their overdraft fees, and are asking each bank to answer a set of questions about how they are continuing to profit from these fees by no later than May 18, 2022.
Senator Warren is a national leader for consumer protection and holding big banks accountable for profiting from predatory practices.
- In August 2021, Senator Warren and Booker reintroduced the Stop Overdraft Profiteering Act of 2021, which would ban overdraft fees on debit card transactions and ATM withdrawals, and limit fees placed for checks and recurring payments.
- In May 2021, Senator Warren slammed the CEOs of four of the nation's largest banks -- JPMorgan, Wells Fargo & Co, Citi, and Bank of America -- for taking a collective $4 billion in overdraft fees from people during the pandemic. Senator Warren also urged the CEOs to refund the billions they took from struggling consumers during the pandemic: not agreed to do so.
- In July 2020, Senators Warren and Brian Schatz (D-Hawaii.) sent a letter to Charles W. Schaft, Chief Executive Officer and President of Wells Fargo, following reports about the bank placing borrowers who are not delinquent on their loans in mortgage forbearance programs without their consent and putting consumers at risk of greater financial hardship in the midst of one of the worst economic collapses in history.
- In 2018, Senators Warren and Booker sent a letter to the Consumer Financial Protection Bureau questioning its plan to no longer pursue regulatory action on overdraft fees after it failed to mention action in its most recent regulatory agenda filing, even though it had been on the Bureau’s agenda for four years.
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