Sen. Warren Calls on Big Banks to End Overdraft Fees

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U.S. Sen. Elizabeth Warren, the Massachusetts Democrat and former presidential candidate, has started pushing for an end to overdraft fees, Bloomberg reported Wednesday (May 4).

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She called CEO Jamie Dimon the “star of the overdraft show” because of the billions of dollars JPMorgan Chase has made from the fees, which have come under criticism for being predatory.

She sent letters to Dimon along with two other CEOS, Wells Fargo’s Charlie Scharf, and Brian Moynihan of Bank of America, with the goal of getting them to follow the path of other financial institutions which have gotten rid of all fees for overdrafts, such as rivals Capital One and Citigroup.

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In the letter, Warren said the banking industry as a whole are “raking in these fees, [and should]  follow suit and protect consumers.”

Those letters were signed by two other Democrats, Sen. Cory Booker of New Jersey and Rep. Carolyn Maloney of New York.

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In a previous communication with lawmakers, JPMorgan said it had been working with customers on avoiding the costs. But the bank did say that overdrafts were “a matter of choice.”

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“At Chase, we know our customers want options,” the New York-based bank said in its letter. “We offer accounts that allow them to ‘go overdrawn’ (often without charging them for it) to complete a requested payment, as well as accounts that do not offer overdraft services and, therefore, do not incur overdraft fee.”

See also: Banks Rewrite Revenue Playbook as Overdraft Fees Slide

PYMNTS wrote that overdraft fees falling out of prominence has banks losing a form of revenue.

There were also reports that the CFPB is planning to crack down on “junk fees” including the overdraft charges as well as late fees on credit card payments.

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The estimates from the CFPB had overdraft fees at $15 billion in 2019, with JPMorgan, Wells Fargo and Bank of America coming out to 44% of that number.

Several banks have gotten rid of or lowered the fees, both because of political pressure and because they want to compete with FinTechs offering no such fees.

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