Jennifer S. Martin on Depositary Account Overdraft Fees

Jennifer S. Martin of Oregon has written How Your $4 Coffee Can Cost You $39 or More if You Use Your Debit Card! Federal Level Consumer Protection and Modern Payments Transactions, University of Memphis Law Review.  Here's the abstract:

In early 2009, the Federal Reserve Board, along with the Office of Thrift Supervision (OTS) and the National Credit Union Administration (NCUA) (the "Agencies") proposed new rules primarily targeted to ATM and debit card transactions "intended to ensure that consumers have clear and timely information about their account balances, so that they can properly manage their accounts and avoid unexpected overdraft charges" (Proposed Overdraft Rules). This Article advocates the adoption of an opt-in regulatory mechanism for depositary account overdraft fees of the general type proposed by the Agencies, but cautions against proposals that do not provide adequate disclosure to consumers or that result in the imposition of overdraft fees even where consumers have elected not to have overdraft protection for ATM and POS transactions. This Article also advocates elimination of banking practices that place consumers into overdraft fee systems by default, or which increase the amount of fees, such as holds for purchases like gasoline and restaurants and reordering daily transactions to subtract the highest-dollar amounts first.

This Article further argues that the Treasury's Blueprint's failure to address specific consumer protection deficiencies (such as debit cards) is not a signal that they are unimportant to regulation of the financial industry. As payment systems continue to change and the products offered by depositary institutions expand, in fact, the issues associated with developing payment systems may require more frequent attention. This Article concludes that successful regulation of the financial system on a longer term necessitates a reworking of our current regulatory framework beyond the slow-moving split-authority structure currently prevailing. While the specific approach to future financial regulation is subject to debate, the concentration of responsibility for consumer issues under one Business Conduct Regulator would mark a progressive change to our experience. We should not hesitate to abandon a regulatory framework that no long continues to adequately respond to market innovations and consumer needs.

Comments

[michele scully]

It makes me sick that Americans were forced to bailout banks,and told like we are children that the the world would end if we did nothing.Small buiness,senior citizens,the poor,and every working class family are being broken by these bank charges.Americans are losing their homes,fighting like hell to pay everyday bills and take care of our children.Poor credit scores,taxes,fines,credit card (better off borrowing from the mob)they might break my leg if I can't pay,much better than bad credit score or the IRS.Our goverment has a vested interest in the banks,not in us, remember we have to pay what they say or we go to jail,FREEDOM? RIGHTS? Only if our goverment allows it.