California State Senator Steven Bradford (D-Gardena) introduced Senate Bill 1075 this week, legislation that would unfairly target state-chartered credit unions by limiting courtesy overdraft protection and non-sufficient fund (NSF) services for their members.
It’s imperative for credit union advocates to contact their state senators immediately through Connect for the Cause. You can share your concerns about the negative impact that SB 1075 will have on credit union members and ask that the bill be tabled until the final rule has been promulgated by the Consumer Financial Protection Bureau (CFPB).
SB 1075 imposes stringent requirements on how state-chartered credit unions serve their members that utilize overdraft protection services by limiting the number of overdraft and NSF transactions to three per month, while also mandating a five-day waiting period before a fee can be assessed.
In addition to limiting consumer choice at state-chartered credit unions, SB 1075’s timing is premature. The CFPB issued a proposed rule in January 2024 on courtesy overdraft-pay for large financial institutions that many see as an industry standard. The CFPB’s final rule will inevitably put downward price pressure on the product and institution. Therefore, the introduction of SB 1075 in California is premature at best.
Overdraft protection is a financial tool that credit union members rely on. Restricting access to overdraft protection could force credit union members into difficult positions and more expensive alternatives, such as predatory lenders. SB 1075 limits a consumer’s choice to utilize financial services that best suit their needs.
The California Credit Union League’s filed our opposition letter on SB 1075 addresses overdraft and NSF fees at California state-chartered credit unions. League leaders also recently met with Bradford and had a positive conversation.
This bill will be our top priority during the 2024 California Government Relations Rally from April 8 – 9. Please register today!
Credit Union Overdraft Resources
As credit unions showcase the unique qualities that set the industry apart from traditional banking institutions, the California and Nevada Credit Union Leagues have made overdraft protection resources available to help you stay proactive in our ever-evolving political and regulatory landscape, ensuring you have unparallelled support to navigate 2024 with confidence.
Access the Credit Union Overdraft Resources site for talking points, support, advocacy, data, and more!
This can help as you communicate with members, consumers, the public, and the news media about your credit union’s overdraft protection program. Credit unions have always served their members diligently, fostering trust by providing personalized financial services. That’s why credit unions oppose restrictions on access to overdraft protection services that consumers value and rely on for peace of mind.
