CFPB proposes rules on fees for instantaneously declined transactions and on overdraft fees

The Consumer Financial Protection Bureau yesterday proposed a rule to block banks and other financial institutions from charging non-sufficient funds fees on transactions declined at the time the consumer swipes, taps, or clicks — that is, transactions that the financial institution declines in real time. These types of transactions include declined debit card purchases and ATM withdrawals, as well as some declined peer-to-peer payments.The agency is accepting comments through March 25, 2024.

This proposal comes a week after the CFPB proposed a rule on overdraft fees. That proposal would close what the agency calls an “an outdated loophole” that exempts overdraft lending services from provisions of the Truth in Lending Act and other consumer financial protection laws. Under the proposal, large banks would be free to extend overdraft loans if they complied with longstanding lending laws, including disclosing any applicable interest rate. Alternatively, banks could charge a fee to recoup their costs at an established benchmark – as low as $3, or at a cost they calculate, if they show their cost data. The deadline for comments on the proposal is April 1, 2024.

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