Sec. 4. Fair marketing and provision of overdraft coverage programs
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Chapter 2 of the Truth in Lending Act ( 15 U.S.C. 1631 et seq. ) is amended by adding at the end the following new section: No depository institution may engage in acts or practices in connection with the marketing of or the provision of overdraft coverage that are unfair, deceptive, or designed to evade the provisions of this section. Each depository institution that provides or offers to provide overdraft coverage with respect to transaction accounts held at that depository institution shall clearly and conspicuously disclose in all marketing materials for such overdraft coverage— any overdraft coverage fees with respect to such overdraft coverage; and that by not opting-in to such overdraft coverage— a consumer’s transaction may be declined if there are insufficient funds in the related transaction account; and the consumer will not be charged a fee if such transaction is declined.
A depository institution may charge overdraft coverage fees with respect to the use of an automatic teller machine or point of sale transaction only if the consumer has consented in writing, in electronic form, or in such other form as is permitted under regulations of the Bureau. Each depository institution shall clearly disclose to each consumer covered by an overdraft protection program of that depository institution— that— the consumer may be charged for not more than one overdraft coverage fee in any single calendar month and not more than 6 overdraft coverage fees in any single calendar year, per transaction account; and the depository institution retains the discretion to pay (without assessing an overdraft coverage fee) or reject overdrafts incurred by the consumer beyond the numbers described in subparagraph (A); the overdraft coverage fee as an annual percentage rate, so as to permit consumers to meaningfully compare the overdraft coverage to alternative forms of overdraft options and other sources of credit; information about any alternative overdraft products that are available (such as linked accounts, lines of credit, and alerts), including a clear explanation of how the terms and fees for such alternative services and products differ; and such other information as the Bureau may require, by rule.
Each depository institution that offers an overdraft coverage program shall, in each periodic statement for any transaction account that has an overdraft coverage program feature, clearly disclose to the consumer the dollar amount of all overdraft coverage fees and nonsufficient fund fees charged to the consumer for the relevant period and year to date. No depository institution may include the amount available under the overdraft coverage program of a consumer as part of the transaction account balance of that consumer.
Each depository institution shall promptly notify consumers, through a reasonable means selected by the consumer, when overdraft coverage has been accessed with respect to the account of the consumer, not later than on the day on which such access occurs, including— the date of the transaction; the type of transaction; the overdraft amount; the overdraft coverage fee; the amount necessary to return the account to a positive balance; and whether the participation of a consumer in an overdraft coverage program will be terminated if the account is not returned to a positive balance within a given time period.
Each depository institution shall provide prompt notice to the consumer, using a reasonable means selected by the consumer, if the institution terminates or suspends access to an overdraft coverage program with respect to an account of the consumer, including a clear rationale for the action. Each depository institution shall— warn any consumer covered by an overdraft coverage program who engages in a transaction through an automated teller machine or a branch teller if completing the transaction would trigger overdraft coverage fees, including the amount of the fees; and provide to the consumer the opportunity to cancel the transaction before it is completed.
A depository institution may charge not more than one overdraft coverage fee in any single calendar month, and not more than 6 overdraft coverage fees in any single calendar year, per transaction account. The amount of any overdraft coverage fee that a depository institution may assess for paying a transaction (including a check or other debit) shall be reasonable and proportional to the amount of the overdraft. The Bureau, in consultation with the Board of Governors of the Federal Reserve System, Comptroller of the Currency, the Board of Directors of the Federal Deposit Insurance Corporation, and the National Credit Union Administration Board, may issue rules to provide an amount for any overdraft coverage fee that is presumed to be reasonable and proportional the amount of the overdraft.
In order to minimize overdraft coverage fees charged to consumers, each depository institution shall post transactions with respect to transaction accounts in such a manner that the consumer does not incur avoidable overdraft coverage fees. No depository institution may charge an overdraft coverage fee on any category of transaction, if the overdraft results solely from a debit hold amount placed on a transaction account that exceeds the actual dollar amount of the transaction.
In implementing the requirements of this section, each depository institution shall provide to consumers who have not consented to participate in an overdraft coverage program, transaction accounts having the same terms, conditions, or other features as those that are provided to consumers who have consented to participate in such overdraft coverage program, except for features of such overdraft coverage. No depository institution may charge any nonsufficient fund fee with respect to— any transaction at an automated teller machine; or any debit card transaction.
No depository institution may report negative information regarding the use of overdraft coverage by a consumer to any consumer reporting agency (as that term is defined in section 603 of the Fair Credit Reporting Act ( 15 U.S.C. 1681a )) when the overdraft amounts and overdraft coverage fees are repaid under the terms of an overdraft coverage program. The Bureau shall carry out a study on whether consumers are being subjected to abusive practices with respect to prepaid card overdraft coverage.
Not later than 1 year after the date of the enactment of this section, the Bureau shall issue a report to the Congress on all findings and determinations made in carrying out the study required under subparagraph (A). If the Bureau, in carrying out the study required under paragraph (1)(A), determines that consumers are being subjected to abusive practices with respect to prepaid card overdraft coverage, the Bureau may, to the extent the Bureau determines appropriate, apply the provisions of this section to prepaid card overdraft coverage to the same extent such provisions apply to overdraft coverage offered by depository institutions.
For purpose of this section: The term prepaid card has the meaning given the term general-use prepaid card under section 915(a)(2)(A) of the Electronic Fund Transfer Act. The term prepaid card overdraft coverage means the payment of a charge posted against a prepaid card— where the prepaid card has insufficient or unavailable funds with which to cover such payment; and where a fee or other charge is assessed against the consumer in connection with such payment. No provision of this section may be construed as prohibiting a depository institution from retaining the discretion to pay, without assessing an overdraft coverage fee or charge, an overdraft incurred by a consumer. .
The table of contents for chapter II of the Truth in Lending Act is amended by inserting after the item relating to section 140A the following new item: 140B. Overdraft coverage program disclosures and consumer protection. .
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