Pursued by four industry groups and three banks legal action against Consumer Financial Protection BureauThe (CFPB) final rules regarding overdraft services were released on Thursday (December 12).
In the lawsuit, the organizations claim that the CFPB exceeded its regulatory authority with the new regulations and failed to properly consider how its actions would harm consumers. consumer banking association (CBA) said on Thursday. press release.
The four entities filing the lawsuit are CBA; American Bankers Association (ABA), american credit union and Mississippi Bankers Association.
The three banks participating in the association in the lawsuit are based in Arkansas. arvest bankbased in Mississippi franklin bank and based in Mississippi commercial bank.
In addition to filing the complaint, the plaintiffs plan to seek a preliminary injunction barring the CFPB from enforcing the new rules until the court makes a final decision on the case, according to the release.
“While we are disappointed, the CBA has no choice but to take legal action to counter the CFPB's blatant legal excesses due to its misguided rules to ensure consumers have access to liquidity through overdraft services. We had no choice,” said CBA President and CEO. lindsay johnson said in a release.
When announcing a new work Overdraft fee On Thursday, the CFPB announced it would tighten regulations on large financial institutions and aim to close what it called an “outdated overdraft loophole” in lending laws.
The new rules are scheduled to go into effect on October 1, 2025, and apply to banks and credit unions with more than $10 billion in assets. These institutions require you to choose one of three options for overdraft programs. Overdraft fees are capped at $5. Set a fee that only covers costs and losses. or comply with standard lending laws, including interest rate disclosures.
The CFPB said in a press release Thursday that the rule addresses an exemption dating back to 1969, when the Federal Reserve exempted overdraft services from the provisions of the Truth in Lending Act.
“The CFPB is cracking down on these excessive junk fees and calling on major banks to come clean about the interest rates they charge on overdraft loans,” said the CFPB director. Rohit Chopra said in a release.
The CFPB's move could spark a legal challenge in court and could have a series of negative ramifications for consumers as banks consider offsetting the impact for consumers. . new regulationsPYMNTS reported Thursday.
