Dear Honorable Jim Bunning and Honorable Geoff Davis,
I am asking for your full support for S. 1799, introduced by Senator Dodd in October of 2009 and please support H.R. 3904 which was introduced by Congresswoman Maloney.
Banks and credit unions are engaging in unfair practices on a large scale which are costing people like me unfair and unreasonable amounts of money. These institutions have never to my knowledge enrolled me or my wife in this expensive overdraft coverage yet I am paying for it without knowledge and consent.
Banks should not be permitted to charge $37 fees for small overdrafts without warning the consumer.
They should not engage in practices that drive up my fees to favor their organisation by negating the fiduciary duty they have to the consumer, such as changing the order daily transactions come through to the bank, thus causing the largest draft to be put through first even though it was the last draft.
By shuffling the way the payments were made, instead of charging the $37 fee to just the last largest transaction, they enable themselves to charge it to all the transactions. Therefore a $37 fee can be changed into $370 if there were nine the smaller transactions that came through before the tenth largest and latest transaction was processed that caused the account to be overdrawn.
For example, I can view my account on the bank's website on one evening and view the order of pending debits. The next day the order has been rearranged. In my opinion his is blatant fraud.
I have owned a retail business for most of my adult life and recall that in bygone days if a customer wrote a check and didn't have funds to cover the draft, the bank would not pay and send the non-sufficient item back to the payee and inform the merchant of the returned check. The customer was charged a fee for the bad check and the merchant was charged for submitting the check (which may have also been passed on to the consumer). Somewhere along the way the rules were changed. Banks now have learned that paying the overdrafts on their customer’s behalf enables them to charge usurious fees to their customers on a daily basis. By doing this bankers and make hundreds and hundreds of dollars off individual customers that can least afford to pay the fees. This amounts to predatory lending without even getting the consent of the customer.
My bank, Fifth Third, offers something called Early Access which allows a customer to borrow a short term loan up to $500 with a 10% fee. The usual purpose of this access is to prevent overdraft fees. The $500 plus the $50 interest must be paid within 20 days and is automatically taken out of any EFT deposit. For those that can least afford to pay an overdraft, wagging this carrot in front on them is very tempting offer, however as they receive their next paycheck or Social Security check it will have a short fall of what is owed. Therefore this "payday loan" which can go on and on causing a cycle of continual debt with interest.
Although Kentucky is unaffected, in May of 2008 Ohio State legislators passed H.R. Bill 545 which capped annual interest at no more than 28%. Payday lenders pulled their business out of the state since they could no longer make loans that had annual interest rates of up to 423% to 680%. Fifth Third Bank has managed to thwart this law by charging a 10% fee for the 20 day loan. However the cycle of debt continues for those desperate to not pay overdraft fees.Please consider any legislation that would prohibit financial institutions from taking advantage of the public in this manner through predatory fees and require banks to have signed customer consent before offering overdraft protection.