“U.S. regulators are stepping up scrutiny of overdraft fees charged by banks, a big revenue stream that is helping the industry lessen the hit caused by low interest rates and the sluggish economy.
The Consumer Financial Protection Bureau, in a report set for release Tuesday, plans to criticize the U.S. banking industry for practices that it says range from confusing rules on overdraft fees to increasing the likelihood of multiple fees being charged to the same customer.
The agency, created by the Dodd-Frank financial-overhaul law in 2010 to be a powerful voice for consumers, said it has no immediate plans to issue or recommend new overdraft-fee rules.
But the report is the strongest signal yet that the CFPB is burrowing into the controversial fees, which generated about $32 billion in revenue in the U.S. last year, according to research firm Moebs Services Inc.
Since its creation, the CFPB has examined areas from mortgages to student loans to credit reports. The agency’s efforts come as banks and other financial institutions are struggling to regain profit momentum five years after the financial crisis erupted.
Fees are a huge revenue source for banks but have exposed them to ire from regulators and consumers.
In 2011, Bank of America Corp., BAC -0.60% the second-largest U.S. bank by assets, quickly abandoned plans for a monthly debit-card charge of $5 after it was denounced by lawmakers and mocked on “The Tonight Show.”
Richard Hunt, president and chief executive of the Consumer Bankers Association, a trade group of big and regional banks, said consumers “have the right to choose the products and features which best provide for their family’s daily needs.”
New rules by the CFPB could push some consumers to use “unregulated industries with riskier and costlier alternatives,” such as payday lenders, check cashers or pawn shops, he said….”
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