CFPB Unveils Disclosure Forms In Response To Overutilization Of Overdraft Fees

On Aug. 4, the Consumer Financial Protection Bureau (CFPB) released the results of its study into frequent overdrafters and four overdraft disclosure model forms as part of its Know Before You Owe initiative. The CFPB designed these one-page prototypes to help consumers understand the costs associated with opting into overdraft coverage and in an effort to improve the model form that financial institutions currently use. As of 2010, consumers must "opt in" to coverage so that when the consumer attempts to use his/her debit card or retrieve money from an ATM in an amount that exceeds his/her account balance, the bank allows the transaction and the consumer pays a fee after the fact. If the consumer has elected not to opt in, such a transaction will be declined and no fee will be incurred.