Banks Should Eliminate Overdraft Fees, Attorneys General Say

(Bloomberg) -- Eighteen attorneys general called on the heads of JPMorgan Chase & Co., Bank of America Corp., U.S. Bank and Wells Fargo & Co. to eliminate overdraft fees on consumer accounts. 

The letters to the chief executive officers say that more than $11 billion in such fees were charged in 2019, with most hitting “the most vulnerable consumers with the lowest average account balances.” Consumers of color are “disproportionately affected by these fees,” which can result in closed accounts, according to the letters.  

“Excessive overdraft fees have hurt the most financially vulnerable New Yorkers,” Attorney General Letitia James said in a statement. Joining James in signing the letters are the attorneys general for California, Connecticut, the District of Columbia, Delaware, Hawaii, Illinois, Iowa, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, Oregon, Pennsylvania, and Washington. North Carolina signed all the letters except the one to Bank of America, which is based in that state. 

Richard Hunt, president of the Consumer Bankers Association, said leading banks are taking steps to help consumers “avoid unintended fees while protecting their access to a much-needed emergency safety net.”

“While overdraft use has largely declined as a result of recent bank-led innovations, a majority of consumers who use the product do so knowingly and count on it when unexpected expenses arise,” he said in an emailed statement.

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