The Consumer Financial Protection Bureau (CFPB) is fighting for you. Last week, the consumer watchdog sued TCF Bank for tricking consumers into pricey overdraft fees. These fees are outrageous – TCF charged about $35 for an overdraft, even if the charge was for a $5 coffee!
This latest enforcement effort shows just how crucial the CFPB is to everyday Americans. Overdraft fees cost Americans an estimated $11 billion in 2015 – and most of the burden falls on those who can least afford it. Instead of praising the CFPB, however, many legislators in Congress are developing bills that will prevent the CFPB from doing its job effectively.
According to the CFPB, TCF broke the law by making it appear as if it were mandatory to sign up for these pricey overdraft charges. But in fact, thanks to the work of Consumers Union and other advocates, banks have been required since 2010 to get your consent before signing you up for these costly fees. The CFPB also alleges that the bank pushed back against existing consumers who questioned the bank’s overdraft sign-up process.
The CFPB argues further that these tricky practices are deeply embedded in TCF’s business strategy, pointing out that several years ago, TCF identified that overdraft services were crucial to their business. Shortly thereafter, the CFPB alleges, the bank determined that misleading consumers into signing up for overdraft would reap them millions of dollars. Moreover, the CFPB claims that managers in major branches initially received bonuses that rewarded high sign-up rates – and that their CEO in 2010 even named his boat “Overdraft”!
The CFPB is a remarkably productive federal agency. This lawsuit also comes on the heels of a major enforcement action against the student lender Navient (formerly Sallie Mae) for failing its borrowers at every step in the process. In five short years, the CFPB has already returned billions of dollars in restitution to consumers who have been cheated.
Despite – or perhaps because – of its good work on behalf of consumers, the banking industry and its friends in Congress are working to weaken the CFPB. Some lawmakers are seeking to transform it from an agency led by a single director to a five-member commission – which could cause its work to grind to a halt. They are also threatening to subject the CFPB’s budget to the appropriations process – highly uncommon for an independent financial regulatory agency. This move could starve the watchdog of the funds necessary to protect consumers.
Consumers need a cop on the beat to protect them from the big banks. Don’t delay – please show your support for Richard Cordray and the CFPB TODAY by signing our petition right now!