AG James calls on consumer banks to eliminate overdraft

New York Attorney General Letitia James led a multistate coalition of attorneys general to call on the CEOS of Jpmorgan Chase, Bank of America, U.S. Bank, and Wells Fargo to eliminate all overdraft fees on consumer bank accounts.

In a letter to each financial institution, James urged each bank to eliminate overdraft fees by this summer to create a fairer and more inclusive consumer financial system. Numerous studies have shown that overdraft fees have disproportionately affected vulnerable families and communities of color by unnecessarily saddling them with additional debts that they cannot afford.

“For too long, excessive overdraft fees have hurt the most financially vulnerable New Yorkers,” James said in a news release.

“Working families and lowincome New Yorkers cannot afford to continue to be harmed by this unfair and punitive practice, while banks reap big profits. I am calling on the largest consumer banks in the nation to do the right thing and remove overdraft fees. We need a fairer and more inclusive banking system that supports all New Yorkers,” James added.

According to the Attorney General’s Office, overdraft fees have had harmful effects on millions of consumers nationwide. In some instances, consumers can be charged as much as $35 for a purchase of $5 or less. According to the Center for Responsible Lending, a study of overdraft-related fees charged in 2019 found that more than $11 billion in fees were charged, with 84 percent of those fees assessed to consumers with the lowest average account balances. Another study by the Pew Charitable Trust noted that more than 90 percent of such fees are paid by a small subset of consumers, who generally paid three or more such fees per year while earning less than $50,000. The reports found that consumers of color were disproportionately impacted by these fees. The consequences are devastating to consumers’ financial health and, in the worst-case scenarios, result in individuals losing access to banking services.

Despite this well-known fallout from overdraft practices, these fees remain big business for big banks, according to a recent study published by the Consumer Financial Protection Bureau (CFPB). Jpmorgan Chase, Bank of America, U.S. Bank, and Wells Fargo are among the top five U.S. banks in total assets. According to CFPB, three of these institutions collected 44 percent of total overdraft and overdraft-like fees in 2019 among major banks. Elimination of overdraft fees by these four institutions alone would drastically improve access to

RICHARD DREW, FILE — THE ASSOCIATED PRESS New York Attorney General Letitia James speaks at a news conference at her office, in New York.