Maryland Attorney General Asks Banks To End 'Harmful' Overdraft Fees

MARYLAND — Maryland Attorney General Brian E. Frosh and his counterparts in more than a dozen other states are urging major financial institutions to eliminate all overdraft fees on consumer bank accounts, calling them "harmful."

In a letter to the CEOs of JPMorgan Chase, Bank of America, U.S. Bank, & Wells Fargo, Frosh and the other attorney generals urged each bank to eliminate overdraft fees by this summer to create a fairer and more inclusive consumer financial system.

"Overdraft charges are profit centers for these big banks. Often the fees exceed the amount of the overdraft itself, and overdraft fees disproportionately affect vulnerable families and communities
of color by hammering them deeper into debt. Levying these excessive costs on consumers must cease" Frosh said in a news release.

According to Frosh, in some instances, consumers can be charged $35 for a purchase of $5 or less in overdraft fees.

Earlier this year, Citi Bank announced that it would eliminate overdraft fees, which followed a similar announcement late last year by Capital One. Citi Bank is the largest U.S. bank to take this step.

Meanwhile, Bank of America has announced significant changes to its overdraft services, reducing them from $35 to $10 beginning in May.

Wells Fargo also announced big changes for customers enrolled in its overdraft protection service. They'll will no longer pay a fee when funds from a linked account are used to cover transactions on the customer’s checking account.

Still, Frosh said these fees remain big business for JPMorgan Chase, Bank of America, U.S. Bank and Wells Fargo, catching the attention of the Consumer Financial Protection Bureau (CFPB).

According to the CFPB, three of these institutions alone brought in 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 the financial health of consumers across the country, Frosh said.

Joining Attorney General Frosh in sending the letter are the attorneys general of California, Connecticut, the District of Columbia, Delaware, Illinois, Iowa, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina (all except Bank of America), Oregon, Pennsylvania and Washington.

To read the letter Frosh and his counterparts sent to the financial institutions, click here.