Kaitlin Ainsworth Caruso of Maine has written Back to the Drawing Board? Overdraft fees, the Congressional Review Act, and the CFPB’s Path Back to Consumer Protection. Here’s the abstract:
In late 2024, the Consumer Financial Protection Bureau adopted a rule aimed at a longtime pain point for consumers: high, sometimes unpredictable, overdraft fees. The CFPB predicted that the rule would save consumers billions of dollars per year. But it was not to be. The second Trump Administration has taken unprecedented, sometimes unlawful, action to incapacitate and dismantle the CFPB. The President and Congress have also worked together to use an unusual statutory tool, the Congressional Review Act, to not only to kill the overdraft rule but also keep the CFPB from adopting any regulation that is “substantially the same” in the future without Congressional permission. The CFPB’s statutory mandate to exist hasn’t gone away, nor has the harm that high, unpredictable overdraft fees inflict on vulnerable consumers. This Article accordingly takes up the task of exploring how a future, reinvigorated CFPB might address the problem of abusive overdraft fees. I propose barring banks from imposing an overdraft fee on any transaction that it did not settle in real time-that is, banks cannot impose any overdraft fee unless, in real time, they check that funds are available, warn consumers of a potential overdraft, and promptly deduct the funds from their account. This approach would curtail a bank’s discretion over how and when to deem an account overdrawn-discretion that banks have used in the past to maximize their overdraft revenue at consumers’ expense. In short, this Article offers a proposed path back from the brink for an agency and a rule meant to protect consumers from being needlessly charged for having too little money.
