The California and Nevada Credit Union Leagues recently submitted a comment letter to the Consumer Financial Protection Bureau (CFPB) regarding its proposed rule on overdraft services.
The bureau’s rule targets “very large” financial institutions with assets exceeding $10 billion, allowing them to offer courtesy overdraft services or overdraft lines of credit. However, this rule’s impact extends beyond large institutions, affecting smaller credit unions and consumers. Under the proposal, covered financial institutions can calculate costs for courtesy overdraft protection services using their own “breakeven standard,” or a CFPB-set “benchmark fee” ranging from $3 to $14.
However, the Leagues believe this proposal misses the mark and presents significant challenges. The Leagues believe the CFPB’s proposal is a solution in search of a problem, unfairly burdening larger credit unions and posing unintended consequences for smaller credit unions and credit union members. The proposed price cap on overdraft services could lead many credit unions to discontinue essential programs, limiting options during financial emergencies and exposing their members to risks.
Key concerns raised by the Leagues include competitive harm, consumer understanding and preference for overdraft protection, oversight of operational costs, implications with respect to the Truth in Lending Act (TILA), and potential impacts on access for low-to-moderate-income households.
The Leagues strongly advocate for the CFPB to withdraw its proposal immediately and seek a balanced approach that protects consumers’ access to financial services, while addressing any legitimate concerns in a fair and equitable manner.
Additionally, the federal policy battle over overdrafts is just starting. The Leagues have taken active steps in response to this proposed rule, including:
The rule is expected to be finalized in October 2025.
2855 East Guasti Rd., Suite 202
Ontario, CA 91761
909.212.6000
1201 K. St., Suite 1050
Sacramento, CA 95814-3992
916.325.1360
c/o Great Basin FCU
9770 South Virginia Street
Reno, NV 89511-5941
202.638.5777 www.cuna.org
www.dfpi.ca.gov
Clothilde “Cloey” V. Hewlett — 415.263.8500
fid.state.nv.us
702.486.4120 (Las Vegas)
775.684.2970 (Carson City)