Sec. 2. Findings and purpose

218 words·~1 min read·/bill/116/s/3566/is/section-2

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Congress finds the following: Overdraft coverage is a form of short-term credit that depository institutions market for consumer transaction accounts. Historically, depository institutions covered overdrafts for a fee on an ad hoc basis. With the growth in specially designed software programs, and in consumer use of debit cards, overdraft coverage for a fee has become more prevalent. Many depository institutions market a range of overdraft options but aggressively encourage consumers to consent to the most expensive option, where a high flat fee is collected for each individual overdraft transaction.

Many depository institutions— collect a high flat fee, including for small dollar transactions, each time the institution covers an overdraft, impose multiple overdraft coverage fees within a single day, and charge additional fees for each day during which the account remains overdrawn; and charge unreasonable nonsufficient fees. Such abusive practices in connection with overdraft coverage fees and nonsufficient fees have deprived consumers of meaningful options and placed significant financial burdens on low- and moderate-income consumers.

During the public health and financial crisis caused by the novel coronavirus, consumers need relief from such abusive practices more than ever before. It is the purpose of this Act to protect consumers by eliminating abusive overdraft coverage fees, nonsufficient fund fees, and practices relating to the assessment of those fees during covered periods.