Consumer protections in banking services

Financial institutions should be required to offer consumer protections related to fees and disclosures. This includes requiring fees to be fair, reasonable, and clearly disclosed. In addition:

• Transactions should be processed in the order in which they are received.
• Deposits should not be delayed. Holds placed on deposits should be minimized unless there is a high likelihood of fraud. Policymakers, regulators, and the financial industry should continue to develop faster payment mechanisms that reduce delays without increasing cost or compromising safety.
• Customers should be warned when an electronic transaction will result in a fee. They should be allowed to cancel the transaction in order to avoid the fee.
• Consumers should be given an opportunity to fix problems before facing additional charges or similar adverse actions. For example, if a bank account is overdrawn, consumers should be able to make a deposit or transfer in order to cure the overdraft before being charged a fee.

Congress should amend the Electronic Funds Transfer Act (EFTA) to apply its consumer protections to all electronically processed checks.

Overdraft fees should be defined as finance charges under the Truth in Lending Act.

Depository institutions should not be permitted to charge duplicative fees for the use of automated teller machines (ATMs).

Fees charged to customers without an account at a bank should be reasonable and kept to a minimum.

Inactive accounts at financial institutions should not be charged excessive fees. Banks should do the following before reverting such accounts to the state:

• allow sufficient time to pass,
• provide public notice, and
• make a reasonable effort to find the account’s owners or heirs.

Customers should not be charged fees for the use of personalized tellers at ATMs owned or leased by the depository institution.

Consumers should be able to compare factors such as fees and options easily.

Policymakers should require full disclosure in plain language for all financial products, including checking, savings, and money market accounts.

All significant terms and conditions should be featured in clear and complete language on advertisements, announcements, signs, and solicitations for interest.

Banking mergers should maintain a robust system of community banks and be in the public interest. Key factors in approving banking mergers should include the institutions’ compliance with state basic banking laws. Regulators should ensure that communities retain adequate levels and quality of services. Consumers should retain access to banking services.

In areas where basic financial products are not accessible or affordable, policymakers should explore developing and implementing public banking options to ensure access for all. These may include offering basic transaction products at secure locations such as post offices.

Consumer accounts should be protected from unreasonable or illegal debt collection (see also Debt collection and debt sellers). Financial institutions should not garnish accounts that contain funds exempt from garnishment. Before processing requests to garnish or place a lien on an account, depository institutions should check to see whether accounts contain exempt funds. Financial institutions should not be allowed to assess overdraft or other fees when accounts primarily consisting of exempt funds are frozen.

Policymakers should ensure that technological advances in bank products and services include consumer safeguards to remain responsible. These include:

• security breach prevention measures;
• privacy protections;
• complete disclosures; and
• provisions addressing the loss or theft of card products.