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: No depository institution may engage in acts or practices in connection with the marketing of or the provision of overdraft coverage that are 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.
Except as provided in paragraph (2), no depository institution may charge an overdraft coverage fee for any transaction— at an automated teller machine; or involving a one-time debit card transaction. A depository institution may charge an overdraft coverage fee for a check or an automatic recurring payment as part of an overdraft coverage program that incorporates the requirements identified in subsections
(d)through (l). A depository institution may charge overdraft coverage fees with respect to the use of checks or automatic recurring payments only if— the depository institution has waited at least 3 days after opening an account to offer the overdraft coverage program; and 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 1 overdraft coverage fee in any single calendar month and not more than 6 overdraft coverage fees in any single calendar year, per transaction account; 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 and the transaction account balance shall be more prominently displayed than any amount available under the overdraft coverage program. 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. A depository institution may charge not more than 1 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 shall be reasonable and proportional to the cost to the financial institution in providing the overdraft coverage for that transaction, including the cost to the financial institution of funds and other costs directly associated with the transaction. The Bureau, in consultation with the Board of Governors of the Federal Reserve System, the 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 to the costs to the financial institution in providing the overdraft coverage for the transaction. Each depository institution shall post transactions with respect to transaction accounts in such a manner that minimizes overdraft coverage fees and nonsufficient fund 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 defined in section 603 of the Fair Credit Reporting Act ( 15 U.S.C. 1681a ), when the amounts of the overdraft are repaid under the terms of an overdraft coverage program. A depository institution shall request that the consumer reporting agency described in paragraph
(1)delete any previously reported negative information, including closure of an account due to unpaid overdrafts, if the consumer repays the overdrafts or tenders payment for the overdrafts to the depository institution or its successor. 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. For purposes of this section: The term check — has the meaning given the term in section 3 of the Check Clearing for the 21st Century Act ( 12 U.S.C. 5002 ); and does not include a traveler's check. The term depository institution means any entity described in clauses
(i)through
(vi)of section 19(b)(1)(A) of the Federal Reserve Act ( 12 U.S.C. 461(b)(1)(A) ). The term nonsufficient fund fee means a fee or charge assessed in connection with an overdraft for which a depository institution declines payment. The term overdraft means, in a withdrawal by check or other debit from a consumer transaction account in which there are insufficient or unavailable funds in the account to cover such check or debit, the amount of such withdrawal that exceeds the available funds in the account. The term overdraft coverage means the payment of a check presented or other debit posted against a consumer transaction account by the depository institution in which such account is held, even though there are insufficient or unavailable funds in the account to cover such checks or other debits. The term overdraft coverage fee — means any fee or charge assessed in connection with overdraft coverage, or in connection with any negative account balance that results from overdraft coverage; and does not include— a periodic rate in connection with an extension of credit through an overdraft line of credit program; and a fee or charge imposed in connection with any transfer from an account linked to another transaction account. The term overdraft coverage program means a service under which a depository institution assesses an overdraft coverage fee for overdraft coverage. The term transaction account has the meaning given the term in section 19(b)(1) of the Federal Reserve Act ( 12 U.S.C. 461(b)(1) ). . The table of contents for chapter 2 of the Truth in Lending Act is amended by inserting after the item relating to section 140A the following: 140B. Overdraft coverage program disclosures and consumer protection. .
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Sec. 4
Fair marketing and provision of overdraft coverage programs
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