CFPB Releases New Overdraft Protection Study and Prototype “Know Before You Owe” Disclosures

Consumer Finance CFPB Overdraft

On August 4, the CFPB concurrently announced the release of a new study titled “Data Point: Frequent Overdrafters” on the use of overdraft services by consumers, as well as four new “Know Before You Owe” overdraft disclosure prototype templates. The announcement highlights findings in the study regarding the frequency of use and the costs associated with optional overdraft services. Alongside the publication of the study, the Bureau published four prototype templates currently under testing. These templates—which are not yet effective—are meant to improve on existing model forms by more “clearly laying out the size of the fees and when they can be charged,” as well as clarifying “the institution’s overdraft policies” and explaining that the decision to opt-in to the overdraft services is optional and covers only one-time debit card and ATM transactions. The Bureau continues to test the prototypes and consider further changes. The 2010 model form continues to apply until further notice from the CFPB. These developments reflect the CFPB’s years-long interest in overdraft products and build upon a prior 2014 Data Point study of this issue, as previously reported in Infobytes.