AG James sends letter to CEOs of JPMorgan Chase, Bank of America,
US Bank and Wells Fargo to eliminate overdraft fees
NEW YORK – New York Attorney General Letitia James has led a multi-state coalition of attorneys general to call on the CEOs of JPMorgan Chase, Bank of America, US Bank and Wells Fargo to eliminate all overdraft fees on accounts consumer banking. In a letter to every financial institution, Attorney General James urged every bank to eliminate overdraft fees by this summer to create a fairer and more inclusive financial system for consumers. Numerous studies have shown that overdraft fees have disproportionately affected vulnerable families and communities of color by unnecessarily burdening them with additional debt they cannot afford.
“For too long, excessive overdraft fees have hurt New Yorkers most financially vulnerable,” said Attorney General James. “Working families and low-income New Yorkers cannot afford to continue to be harmed by this unfair and punitive practice, while the banks reap big profits. I’m calling on the nation’s largest consumer banks to do the right thing and scrap overdraft fees. We need a fairer, more inclusive banking system that supports all New Yorkers. »
Overdraft fees have adversely affected millions of consumers nationwide. In some cases, consumers may be charged up to $35 for a purchase of $5 or less. According to the Center for Responsible Lending, a study of overdraft fees charged in 2019 found that more than $11 billion in fees were charged, with 84% of those fees charged to consumers with the lowest average account balances. . Another study by the Pew Charitable Trust noted that more than 90% of these fees are paid by a small subset of consumers, who typically pay three or more such fees per year while earning less than $50,000. Reports found consumers of color were disproportionately impacted by these fees. The consequences are devastating for the financial health of consumers and, in the worst scenarios, result in the loss of access to banking services.
Despite these well-known fallouts from overdraft practices, overdraft fees remain a significant activity for large banks, according to a recent study released by the Consumer Financial Protection Bureau (CFPB). JPMorgan Chase, Bank of America, US Bank and Wells Fargo are among the top five US banks by total assets. According to the CFPB, three of these institutions collected 44% of total overdraft and similar fees in 2019 from the big banks. The elimination of overdraft fees by these four institutions would significantly improve access to fairer, no-fee banking options for millions of New Yorkers and consumers across the country.
Earlier this year, Citi Bank announced it would eliminate overdraft fees, which followed a similar announcement late last year by Capital One. Citi Bank is the largest US bank to achieve this milestone.
The attorneys general of California, Connecticut, the District of Columbia, Delaware, Hawaii (as well as the Hawaii Consumer Protection Bureau), Illinois, Iowa, Maryland, Massachusetts, Michigan, Minnesota, Nevada join Attorney General James in sending the letters. New Jersey, North Carolina (all except Bank of America), Oregon, Pennsylvania and Washington.
Attorney General James encourages all New Yorkers to be aware of potential overdraft fees when using their debit cards and reminds them of their rights to opt out of overdraft programs directly with their banks.