,i #aafth ,,congress #ast ,session ,h4 ,r4 #dbed ,,in ,,the ,,house ,,of ,,representatives ,september #i1 #bjai,mrs4 ,carolyn ,b4 ,maloney of ,new ,york 7for herself1 ,mr4 ,foster1 ,mr4 ,sherman1 ,mr4 ,garca of ,illinois1 ,mr4 ,cicilline1 ,mr4 ,payne1 ,ms4 ,norton1 ,mr4 ,johnson of ,georgia1 ,mr4 ,mc,govern1 ,mr4 ,grijalva1 ,mr4 ,cohen1 ,ms4 ,gabbard1 ,ms4 ,moore1 ,mr4 ,malinowski1 and ,mr4 ,raskin7 introduced the following bill2 which was referred to the ,committee on ,financial ,services ,a ,,bill ,to amend the ,truth in ,lending ,act to establish fair and transparent practices related to the marketing and provision of overdraft coverage programs at depository institutions1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,overdraft ,protection ,act of #bjai4 #b4 ,findings and purpose 7a7 ,findings ,the ,congress finds the following3 7#a7 ,overdraft coverage is a form of short-term credit that depository institutions provide for consumer transaction accounts4 ,historically1 depository institutions covered overdrafts for a fee on an ad hoc basis4 7#b7 ,with the growth in specially designed software programs and in consumer use of debit cards1 overdraft coverage for a fee has become more prevalent4 7#c7 ,many depository institutions offer a range of overdraft options but aggressively encourage consumers to consent to the most expensive option1 where a high flat fee is collected for every individual overdraft transaction4 7#d7 ,most depository institutions collect a high flat fee1 including for small dollar transactions1 each time the institution covers an overdraft1 in some cases impose multiple overdraft coverage fees within a single day1 and many charge additional fees for each day during which the account remains overdrawn4 7#e7 ,such abusive practices in connection with overdraft coverage fees have deprived consumers of meaningful choices about their accounts and placed significant financial burdens on low- and moderate-income consumers4 7b7 ,purpose ,it is the purpose of this ,act to protect consumers by limiting abusive overdraft coverage fees and practices1 and by providing meaningful disclosures and consumer choice in connection with overdraft coverage fees4 #c4 ,definitions 7a7 ,additional definitions ,section #adj;,b of the ,truth in ,lending ,act1 as added by section #d1 is amended by adding at the end the following new subsection3 7o7 ,definitions relating to overdraft coverage ,for purposes of this section3 7#a7 ,check ,the term check has the same meaning as in section #c7f7 of the ,check ,clearing for the #bast ,century ,act 7#ab ,u4,s4,c4 #ejja et seq471 other than a travelers check4 7#b7 ,depository institution ,the term depository institution has the same meaning as in clauses 7i7 through 7vi7 of section #ai7;b77#a77;,a7 of the ,federal ,reserve ,act 7#ab ,u4,s4,c4 #dfa7;b77#a77;,a774 7#c7 ,nonsufficient fund fee ,the term nonsufficient fund fee means a fee or charge assessed in connection with an overdraft for which a depository institution declines payment4 7#d7 ,overdraft ,the term overdraft means1 in a withdrawal by check or other debit from a consumer transaction account in which there are insufficient or unavailable funds in the account to cover such check or debit1 the amount of such withdrawal that exceeds the available funds in the account4 7#e7 ,overdraft coverage ,the term overdraft coverage means the payment of a check presented or other debit posted against a consumer transaction account by the depository institution in which such account is held1 even though there are insufficient or unavailable funds in the account to cover such checks or other debits4 7#f7 ,overdraft coverage fee ,the term overdraft coverage fee means any fee or charge assessed in connection with overdraft coverage1 or in connection with any negative account balance that results from overdraft coverage1 unless such fee or charge is imposed in connection with-- 7,a7 an extension of credit through an overdraft line of credit program where such fee or charge was considered a finance charge under this title as in effect immediately prior to the enactment of the ,overdraft ,protection ,act of #bjai2 or 7,b7 any transfer from an account linked to another transaction account4 ,such fee shall be considered a finance charge for purposes of section #ajf7;a71 but shall not be included in the calculation of the rate of interest for purposes of section #ajg7e77;,a77vi7 of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageg7e77;,a77vi774 7#g7 ,overdraft coverage program ,the term overdraft coverage program means a service under which a depository institution assesses an overdraft coverage fee for overdraft coverage4 7#h7 ,transaction account ,the term transaction account has the same meaning as in section #ai7;b77#a77;,c7 of the ,federal ,reserve ,act 7#ab ,u4,s4,c4 #dfa7;b77#a77;,c774 4 7b7 ,conforming amendment ,section #ajg7e77;,a77vi7 of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageg7e77;,a77vi77 is amended by inserting 1 other than an overdraft coverage fee1 as defined in section #adj;,b7o7 of the ,truth in ,lending ,act after inclusive of all finance charges4 #d4 ,fair marketing and provision of overdraft coverage programs 7a7 ,in general ,chapter #b of the ,truth in ,lending ,act 7#ae ,u4,s4,c4 #afca et seq47 is amended by adding at the end the following new section3 #adj;,b4 ,overdraft coverage program disclosures and consumer protection 7a7 ,prohibitions ,no depository institution may engage in acts or practices in connection with the marketing of or the provision of overdraft coverage that are unfair1 deceptive1 or designed to evade the provisions of this section4 7b7 ,marketing disclosures ,each depository institution that provides or offers to provide overdraft coverage with respect to transaction accounts held at that depository institution shall clearly and conspicuously disclose in all marketing materials for such overdraft coverage-- 7#a7 any overdraft coverage fees with respect to such overdraft coverage2 and 7#b7 that by not opting in to such overdraft coverage-- 7,a7 a consumer's transaction may be declined if there are insufficient funds in the related transaction account2 and 7,b7 the consumer will not be charged a fee if such transaction is declined4 7c7 ,consumer consent opt-,in ,a depository institution may charge overdraft coverage fees with respect to the use of an automatic teller machine or point of sale transaction only if the consumer has consented in writing1 in electronic form1 or in such other form as is permitted under regulations of the ,bureau4 7d7 ,consumer disclosures ,each depository institution shall clearly disclose to each consumer covered by an overdraft coverage program of that depository institution-- 7#a7 that-- 7,a7 the consumer may be charged for not more than one overdraft coverage fee in any single calendar month and not more than #f overdraft coverage fees in any single calendar year1 per transaction account2 and 7,b7 the depository institution retains the discretion to pay 7without assessing an overdraft coverage fee7 or reject overdrafts incurred by the consumer beyond the numbers described in subparagraph 7,a72 7#b7 the overdraft coverage fee as an annual percentage rate1 so as to permit consumers to meaningfully compare the overdraft coverage to alternative forms of overdraft options and other sources of credit2 7#c7 information about any alternative overdraft products that are available 7such as linked accounts1 lines of credit1 and alerts71 including a clear explanation of how the terms and fees for such alternative services and products differ2 and 7#d7 such other information as the ,bureau may require1 by rule4 7e7 ,periodic statements ,each depository institution that offers an overdraft coverage program shall1 in each periodic statement for any transaction account that has an overdraft coverage program feature1 clearly disclose to the consumer the dollar amount of all overdraft coverage fees and nonsufficient fund fees charged to the consumer for the relevant period and year to date4 7f7 ,exclusion from account balance information ,no depository institution may include the amount available under the overdraft coverage program of a consumer as part of the transaction account balance of that consumer4 7g7 ,prompt notification ,each depository institution shall promptly notify consumers1 through a reasonable means selected by the consumer1 when overdraft coverage has been accessed with respect to the account of the consumer1 not later than on the day on which such access occurs1 including-- 7#a7 the date of the transaction2 7#b7 the type of transaction2 7#c7 the overdraft amount2 7#d7 the overdraft coverage fee2 7#e7 the amount necessary to return the account to a positive balance2 and 7#f7 whether the participation of a consumer in an overdraft coverage program will be terminated if the account is not returned to a positive balance within a given time period4 7h7 ,terminated or suspended coverage ,each depository institution shall provide prompt notice to the consumer1 using a reasonable means selected by the consumer1 if the institution terminates or suspends access to an overdraft coverage program with respect to an account of the consumer1 including a clear rationale for the action4 7i7 ,overdraft coverage fee limits 7#a7 ,notice and ,opportunity ,to ,cancel ,each depository institution shall-- 7,a7 warn any consumer covered by an overdraft coverage program who engages in a transaction through an automated teller machine or a branch teller if completing the transaction would trigger overdraft coverage fees1 including the amount of the fees2 and 7,b7 provide to the consumer the opportunity to cancel the transaction before it is completed4 7#b7 ,frequency ,a depository institution may charge not more than one overdraft coverage fee in any single calendar month1 and not more than #f overdraft coverage fees in any single calendar year1 per transaction account4 7#c7 ,reasonable and proportional overdraft coverage fees 7,a7 ,in general ,the amount of any overdraft coverage fee that a depository institution may assess for paying a transaction 7including a check or other debit7 shall be reasonable and proportional to the amount of the overdraft4 7,b7 ,safe harbor rule authorized ,the ,bureau1 in consultation with the ,board of ,governors of the ,federal ,reserve ,system1 ,comptroller of the ,currency1 the ,board of ,directors of the ,federal ,deposit ,insurance ,corporation1 and the ,national ,credit ,union ,administration ,board1 may issue rules to provide an amount for any overdraft coverage fee that is presumed to be reasonable and proportional to the amount of the overdraft4 7#d7 ,posting order ,in order to minimize overdraft coverage fees charged to consumers1 each depository institution shall post transactions with respect to transaction accounts in such a manner that the consumer does not incur avoidable overdraft coverage fees4 7j7 ,debit holds ,no depository institution may charge an overdraft coverage fee on any category of transaction1 if the overdraft results solely from a debit hold amount placed on a transaction account that exceeds the actual dollar amount of the transaction4 7k7 ,nondiscrimination for not opting ,in ,in implementing the requirements of this section1 each depository institution shall provide to consumers who have not consented to participate in an overdraft coverage program1 transaction accounts having the same terms1 conditions1 or other features as those that are provided to consumers who have consented to participate in such overdraft coverage program1 except for features of such overdraft coverage4 7l7 ,nonsufficient fund fee limits ,no depository institution may charge any nonsufficient fund fee with respect to-- 7#a7 any transaction at an automated teller machine2 or 7#b7 any debit card transaction4 7m7 ,reports to consumer reporting agencies ,no depository institution may report negative information regarding the use of overdraft coverage by a consumer to any consumer reporting agency 7as that term is defined in section #fjc of the ,fair ,credit ,reporting ,act 7#ae ,u4,s4,c4 #afha;a77 when the overdraft amounts and overdraft coverage fees are repaid under the terms of an overdraft coverage program4 7n7 ,rule of construction ,no provision of this section may be construed as prohibiting a depository institution from retaining the discretion to pay1 without assessing an overdraft coverage fee or charge1 an overdraft incurred by a consumer4 4 7b7 ,technical amendment ,the table of contents for chapter ,,ii of the ,truth in ,lending ,act is amended by inserting after the item relating to section #adj;,a the following new item3 #adj;,b4 ,overdraft coverage program disclosures and consumer protection4 4 #e4 ,regulatory authority of the ,bureau ,not later than #bd months after the date of the enactment of this ,act1 the ,bureau of ,consumer ,financial ,protection 7hereafter in this ,act referred to as the ,bureau7 shall issue such final rules and publish such model forms as necessary to carry out section #adj;,b of the ,truth in ,lending ,act1 as added by this ,act4 #f4 ,effective date 7a7 ,in general ,this ,act and the amendments made by this ,act shall take effect #a year after the date of the enactment of this ,act1 whether or not the rules of the ,bureau under this ,act or such amendments are prescribed in final form4 7b7 ,moratorium on fee increases 7#a7 ,in general ,during the #a-year period beginning on the date of the enactment of this ,act1 no depository institution may increase the overdraft coverage fees or charges assessed on transaction accounts for paying a transaction 7including a check or other debit7 in connection with an overdraft or for nonsufficient funds4 7#b7 ,definitions ,as used in this section1 the terms depository institution1 overdraft1 overdraft coverage fee1 transaction account and nonsufficient fund fee have the same meanings as in section #adj;,b7o7 of the ,truth in ,lending ,act1 as added by this ,act4