Stop Overdraft Profiteering during COVID–19 Emergency Act of 2020

II 116TH CONGRESS 2D SESSION S. 3566 To prohibit depository institutions from assessing overdraft and non-sufficient fund fees during the novel coronavirus crisis and other disasters, and for other purposes. IN THE SENATE OF THE UNITED STATES MARCH 22, 2020 Mr. BOOKER (for himself and Mr. BROWN) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To prohibit depository institutions from assessing overdraft and non-sufficient fund fees during the novel coronavirus crisis and other disasters, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Stop Overdraft Profit- 4 eering during COVID–19 Emergency Act of 2020’’. 5 SEC. 2. FINDINGS AND PURPOSE. 6 (a) FINDINGS.—Congress finds the following: 7 (1) Overdraft coverage is a form of short-term 8 credit that depository institutions market for con- 9 VerDate Sep 11 2014 22:35 Apr 07, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3566.IS S3566 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 3566 IS sumer transaction accounts. Historically, depository 1 institutions covered overdrafts for a fee on an ad hoc 2 basis. 3 (2) With the growth in specially designed soft- 4 ware programs, and in consumer use of debit cards, 5 overdraft coverage for a fee has become more preva- 6 lent. 7 (3) Many depository institutions market a 8 range of overdraft options but aggressively encour- 9 age consumers to consent to the most expensive op- 10 tion, where a high flat fee is collected for each indi- 11 vidual overdraft transaction. 12 (4) Many depository institutions— 13 (A) collect a high flat fee, including for 14 small dollar transactions, each time the institu- 15 tion covers an overdraft, impose multiple over- 16 draft coverage fees within a single day, and 17 charge additional fees for each day during 18 which the account remains overdrawn; and 19 (B) charge unreasonable nonsufficient fees. 20 (5) Such abusive practices in connection with 21 overdraft coverage fees and nonsufficient fees have 22 deprived consumers of meaningful options and 23 placed significant financial burdens on low- and 24 moderate-income consumers. 25 VerDate Sep 11 2014 22:35 Apr 07, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3566.IS S3566 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 3566 IS (6) During the public health and financial crisis 1 caused by the novel coronavirus, consumers need re- 2 lief from such abusive practices more than ever be- 3 fore. 4 (b) PURPOSE.—It is the purpose of this Act to pro- 5 tect consumers by eliminating abusive overdraft coverage 6 fees, nonsufficient fund fees, and practices relating to the 7 assessment of those fees during covered periods. 8 SEC. 3. DEFINITIONS. 9 In this Act: 10 (1) CHECK.—The term ‘‘check’’— 11 (A) has the meaning given the term in sec- 12 tion 3(6) of the Check Clearing for the 21st 13 Century Act (12 U.S.C. 5002(6)); and 14 (B) does not include a traveler’s check. 15 (2) CHECKING ACCOUNT PENALTY FEE.—The 16 term ‘‘checking account penalty fee’’ means a non- 17 sufficient fund fee or an overdraft coverage fee. 18 (3) CONSUMER.—The term ‘‘consumer’’ has the 19 meaning given the term in section 103(i) of the 20 Truth in Lending Act (15 U.S.C. 1602(i)). 21 (4) CONSUMER REPORTING AGENCY.—The term 22 ‘‘consumer reporting agency’’ has the meaning given 23 the term in section 603 of the Fair Credit Reporting 24 Act (15 U.S.C. 1681a). 25 VerDate Sep 11 2014 22:35 Apr 07, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3566.IS S3566 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 3566 IS (5) COVERED PERIOD.—The term ‘‘covered pe- 1 riod’’ means— 2 (A) the period that begins 1 day after the 3 date on which a major disaster is declared by 4 the President under section 401 of the Robert 5 T. Stafford Disaster Relief and Emergency As- 6 sistance Act (42 U.S.C. 5170), where assistance 7 is authorized under section 408 of that Act (42 8 U.S.C. 5174), and ending 120 days after the 9 end of the incident period for that disaster; or 10 (B) the period that begins 1 day after the 11 date on which the President determines an 12 emergency exists under section 501(b) of the 13 Robert T. Stafford Disaster Relief and Emer- 14 gency Assistance Act (42 U.S.C. 5191(b)) and 15 simultaneously covers all States for a single in- 16 cident, event, or emergency and ending 120 17 days after the end of the incident period for 18 that emergency. 19 (6) DEPOSITORY INSTITUTION.—The term ‘‘de- 20 pository institution’’ has the same meaning as in 21 clauses (i) through (vi) of section 19(b)(1)(A) of the 22 Federal Reserve Act (12 U.S.C. 461(b)(1)(A)). 23 (7) NONSUFFICIENT FUND FEE.—The term 24 ‘‘nonsufficient fund fee’’ means a fee or charge as- 25 VerDate Sep 11 2014 22:35 Apr 07, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3566.IS S3566 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 3566 IS sessed in connection with an overdraft for which a 1 depository institution declines payment. 2 (8) OVERDRAFT.—The term ‘‘overdraft’’ 3 means, in a withdrawal by check or other debit from 4 a consumer transaction account in which there are 5 insufficient or unavailable funds in the account to 6 cover such check or debit, the amount of such with- 7 drawal that exceeds the available funds in the ac- 8 count. 9 (9) OVERDRAFT COVERAGE.—The term ‘‘over- 10 draft coverage’’ means the payment of a check pre- 11 sented or other debit posted against a consumer 12 transaction account by the depository institution in 13 which such account is held, even though there are 14 insufficient or unavailable funds in the account to 15 cover such checks or other debit. 16 (10) OVERDRAFT COVERAGE FEE.—The term 17 ‘‘overdraft coverage fee’’ means any fee or charge 18 assessed in connection with overdraft coverage, or in 19 connection with any negative account balance that 20 results from overdraft coverage, excluding— 21 (A) a periodic rate in connection with an 22 extension of credit through an overdraft line of 23 credit program; or 24 VerDate Sep 11 2014 22:35 Apr 07, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3566.IS S3566 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 3566 IS (B) a fee or charge imposed in connection 1 with any transfer from an account linked to an- 2 other transaction account. 3 (11) OVERDRAFT COVERAGE PROGRAM.—The 4 term ‘‘overdraft coverage program’’ means a service 5 under which a depository institution assesses an 6 overdraft coverage fee for overdraft coverage. 7 (12) TRANSACTION ACCOUNT.—The term 8 ‘‘transaction account’’ has the meaning given the 9 term in section 19(b)(1)(C) of the Federal Reserve 10 Act (12 U.S.C. 461(b)(1)(C)). 11 SEC. 4. CHECKING ACCOUNT PENALTY FEES. 12 (a) PROHIBITION.— 13 (1) IN GENERAL.—During a covered period, no 14 depository institution may assess a checking account 15 penalty fee for any transaction, including a trans- 16 action at an automated teller machine, a 1-time 17 debit card transaction, a transaction that involves 18 the use of a check, or an automatic recurring pay- 19 ment. 20 (2) CORRECTION.—If a depository institution 21 assesses a checking account penalty fee during a 22 covered period in violation of paragraph (1), the de- 23 pository institution shall be considered to be in com- 24 VerDate Sep 11 2014 22:35 Apr 07, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3566.IS S3566 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 3566 IS pliance with that paragraph if the depository institu- 1 tion promptly reverses that assessment. 2 (b) REPORTS TO CONSUMER REPORTING AGEN- 3 CIES.—During a covered period, no depository institution 4 may report negative information regarding the use of over- 5 draft coverage by a consumer to any consumer reporting 6 agency. 7 (c) RULE OF CONSTRUCTION.—Nothing in this sec- 8 tion may be construed as prohibiting a depository institu- 9 tion, during a covered period, from retaining the discretion 10 to pay, without assessing a checking account penalty fee, 11 an overdraft incurred by a consumer. 12 Æ VerDate Sep 11 2014 22:35 Apr 07, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\S3566.IS S3566 pamtmann on DSKBC07HB2PROD with BILLS