Golden State Today

California Attorney General Rob Bonta has voiced his support for protecting consumers by closing the overdraft fee loophole. In a comment letter submitted alongside 17 other attorneys general, Bonta expressed his backing for the Consumer Financial Protection Bureau's proposed overdraft fee rule, which aims to amend Truth in Lending Act regulations.

According to Attorney General Bonta, overdraft fees disproportionately affect low-income Californians and benefit large financial institutions. He stated, "Overdraft fees are a relic and should be left in the past. The Consumer Financial Protection Bureau's proposed rule would protect consumers' pocketbooks and create more transparency about how overdraft fees are handled in the places where they bank."

The proposed rule would require large banks to apply consumer protections and disclose interest rates related to overdraft fees. It aims to close the regulatory loophole that allows banks to charge overdraft fees without adequately disclosing basic credit terms.

The attorneys general have endorsed the proposed rule and are advocating for the benchmark overdraft fee to be set at $3, which would reduce fees and not trigger TILA disclosures. They are also urging the CFPB to consider extending the rule to small financial institutions, as many of them impose costly overdraft fees.

Attorney General Bonta's commitment to consumer protection extends beyond overdraft fees. He has been actively involved in various initiatives, including issuing consumer alerts on filing taxes safely, supporting legislation to prevent medical debt from affecting credit reports, and advocating against hidden fees through enforcement actions and consumer outreach.

The letter of support submitted by Attorney General Bonta and his counterparts highlights the collective effort to promote transparency and fairness in consumer financial practices. By addressing the overdraft fee loophole, they aim to create a more equitable environment for consumers in California and beyond.