Attorney General James Seeks to Protect Consumers from High Overdraft Fees

NEW YORK – New York Attorney General Letitia James and a coalition of 22 other attorneys general sent a letter to the leadership of the U.S. House of Representatives and the House Financial Services Committee urging the House to vote against a resolution that would overturn the Consumer Financial Protection Bureau’s (CFPB) 2024 rule limiting overdraft fees imposed by the country’s largest banks. The rule prevents big banks from charging excessive overdraft fees that can hurt their customers’ credit and sometimes lead to account closures.

“Overturning this rule will only do one thing: help big banks profit at your expense,” said Attorney General James. “Accidentally overdrawing your checking account by a few dollars shouldn’t result in an outrageous fee. The CFPB took action to protect consumers from outrageous overdraft fees, and Congress should do the same. At a time when working families are struggling to make ends meet, our leaders should be protecting Americans’ wallets, not empowering big banks to charge junk fees.”

House Joint Resolution 59 would overturn a 2024 rule issued by the CFPB that applies only to banks with over $10 billion in assets. The rule imposes reasonable limits on the overdraft fees these big banks may charge when customers overdraw their accounts. Nevertheless, late last month, the Senate narrowly passed its version of the resolution overturning the CFPB’s rule by a vote of 52-48, with Republican Senator Josh Hawley joining Senate Democrats to vote against it.

The average overdraft fee imposed by banks is about $35 and is usually significantly larger than the overdraft itself. Overdraft fees are also a major profit center for banks, accounting for about $5.8 billion in revenue in 2023. As Attorney General James and the coalition state in their letter, under the CFPB’s rule, if banks intend to continue profiting from such fees, they must treat them as interest on a loan, which is what they effectively are. Given that most overdraft fees are paid back in less than three days, a typical fee of $35 on an average overdraft of $26 is the equivalent of an annual interest rate of 16,000 percent.

As Attorney General James and the coalition argue in the letter, the CFPB’s rule plays a valuable role in protecting bank customers from excessive and often unexpected charges that can sometimes lead to involuntary account closures, damaging customers’ credit and even driving them out of the banking system altogether. In addition, excessive overdraft fees are unnecessary. As Attorney General James and the coalition point out in the letter, many banks – including Citigroup, Capital One, and Ally Bank – have already eliminated overdraft fees while still providing the convenience of overdraft protection.

Joining Attorney General James in sending this letter are the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Washington, Wisconsin, and the District of Columbia. The Hawaii Office of Consumer Protection also joined the coalition.

Attorney General James is a national leader in protecting consumers. In January 2025, Attorney General James secured more than $1 million from Netspend corporation, a provider of reloadable debit and payroll cards, based in part on the wide range of illegal fees Netspend charged its customers. In August 2024, Attorney General James sued predatory lender Acima for misleading consumers about the cost of its financing, including usurious “rental” fees. In April 2024, Attorney General James led a group of 17 state attorneys general in drafting a comment in support of passing the CFPB overdraft rule that is now threatened with reversal. In February 2024, Attorney General James obtained a $77 million judgment against three merchant cash advance companies and their principals for charging usurious interest rates and undisclosed fees. In January 2024, Attorney General James, along with the CFPB and six other state attorneys general, sued a debt relief company and its affiliates and principals in connection with a scam to trick consumers into paying exorbitant fees while providing nearly no useful services in return. In April 2022, Attorney General James led a coalition of 18 state attorneys general to call on the CEOs of JPMorgan Chase, Bank of America, U.S. Bank, and Wells Fargo to eliminate all overdraft fees on consumer bank accounts.