The CFPB is currently testing four new Know Before You Owe overdraft disclosure prototypes to improve the model form that banks and credit unions already provide. If adopted, these new overdraft forms would be available on the CFPB’s website, and institutions could plug their specific program information into the online form and then quickly download the form. As the Bureau tests these new forms, the current model form continues to apply.
In conjunction with the release of these prototypes, the CFPB published a new study on frequent overdrafters based on data collected between 2011 and 2012. The study compared opted-in frequent overdrafters (i.e., those who overdraw their accounts more than 10 times in a 12-month period) to frequent overdrafters who have not opted-in. The study found that opted-in frequent overdrafters typically: (1) pay almost $450 more in fees; (2) carry low daily balances in their accounts; and (3) have low or no credit scores.
The study also found that banks and credit unions typically decline one-time card-based (“OTCB”) transactions for accounts with an insufficient balance that are not opted-in, while authorizing the OTCB transaction for the opted-in account because the bank or credit union can charge the opted-in account an overdraft fee.
The CFPB is seeking comments on whether the new prototypes are easier to use and understand, and which of the four layouts is best. No deadline has been set for submitting comments, which may be sent to: Cfpb_overdraft_forms@cfpb.gov.