Biden administration proposes new rule to eliminate billions of dollars in overdraft fees charged by banks
Nation's biggest banks still take in roughly $8 billion in overdraft fees every year, according to data from the CFPB.
President Joe Biden has made eliminating junk fees one of his campaign promises for 2024.
The Biden administration has proposed a new rule that could potentially eliminate billions of dollars in overdraft fees charged by banks to customers. Under the proposal, banks would only be able to charge what it costs them to provide overdraft services and this cost would have to be shown to the Consumer Financial Protection Bureau (CFPB). The nation's biggest banks still take in roughly $8 billion in overdraft fees every year, according to data from the CFPB. President Joe Biden has made eliminating junk fees one of his campaign promises for 2024.
The Consumer Financial Protection Bureau (CFPB) has unveiled changes to how big banks structure overdraft protection plans.
Since 2000, American consumers have paid an estimated $280 billion in bank overdraft fees.
Banks call it a service but President Joe Biden calls it exploitation.
Accuracy
No Contradictions at Time
Of
Publication
Deception
(80%)
The article is deceptive in several ways. Firstly, the title implies that President Biden has unveiled new changes to big banks' overdraft fees when in fact he only announced a proposed rule change. Secondly, the author uses sensationalist language such as 'exorbitant overdraft fees' and 'rip off hardworking Americans simply because they can', which is an exaggeration of the situation. Thirdly, the article presents two options for banks to approach commercial overdraft coverage but fails to mention that these are not mutually exclusive and a bank could choose both options if it wished. Lastly, the CFPB's proposed rule change only applies to banks with more than $10 billion in assets which is less than 2% of all US banks.
The title implies that President Biden has unveiled new changes to big banks' overdraft fees when in fact he only announced a proposed rule change.
The CFPB's proposed rule change only applies to banks with more than $10 billion in assets which is less than 2% of all US banks.
The author uses sensationalist language such as 'exorbitant overdraft fees' and 'rip off hardworking Americans simply because they can', which is an exaggeration of the situation.
The article presents two options for banks to approach commercial overdraft coverage but fails to mention that these are not mutually exclusive and a bank could choose both options if it wished.
Fallacies
(85%)
The article contains several examples of appeals to authority and inflammatory rhetoric. The author uses quotes from President Biden and CFPB Director Rohit Chopra to establish their credibility as experts on the topic. Additionally, the article includes statistics about overdraft fees paid by American consumers, which are used to support the argument that banks have been profiting off of vulnerable populations. However, there is no evidence presented in the article to suggest that this profit motive is a fallacy or an unethical practice.
President Joe Biden said in a statement Wednesday on the new rules.
Bias
(85%)
The article contains examples of monetary bias and ideological bias. The author uses language that dehumanizes consumers who use overdrafts by calling them 'vulnerable Americans' and implies that banks are exploiting them for profit. Additionally, the CFPB is portrayed as a heroic agency fighting against big banks to protect consumers from unfair practices.
For too long, some banks have charged exorbitant overdraft feessometimes $30 or morethat often hit the most vulnerable Americans the hardestall while banks pad their bottom lines,
The annual revenue big banks derived from overdraft fees soared
Site
Conflicts
Of
Interest (50%)
Chelsey Cox has a financial interest in big banks as she is an employee of the Consumer Financial Protection Bureau (CFPB), which regulates these institutions. Additionally, Tobi Parks and Lael Brainard are members of the CFPB's board of directors.
Chelsey Cox is an employee at the Consumer Financial Protection Bureau (CFPB) which regulates big banks.
Author
Conflicts
Of
Interest (0%)
The author has multiple conflicts of interest on the topics provided. The article discusses changes to big banks and overdraft fees, which are issues that the Consumer Financial Protection Bureau (CFPB) regulates. Tobi Parks is a member of the CFPB's board of directors and Lael Brainard is a nominee for chairwoman of the Federal Reserve Board, both positions could compromise their ability to act objectively on these topics.
The article discusses changes to big banks and overdraft fees, which are issues that the Consumer Financial Protection Bureau (CFPB) regulates. Tobi Parks is a member of the CFPB's board of directors and Lael Brainard is a nominee for chairwoman of the Federal Reserve Board.
The article mentions President Joe Biden as being involved in these changes, which could compromise his ability to act objectively on these topics.
The Consumer Financial Protection Bureau is expected to propose rules this week that further rein in banks' ability to charge customers a fee when they overdraw their bank account.
Opponents of the fees often cite the example of a $3 cup of coffee costing someone $40.
Banks call it a service but President Joe Biden calls it exploitation.
Accuracy
Most of the biggest banks have added safeguards to customers' accounts to allow them to bring the balance back into positive territory before they incur a fee, which at some banks can be as high as $39.
The largest banks have also curtailed their collection of fees for non-sufficient funds.
Black and Latino households are more likely to overdraft than white households.
Deception
(50%)
The article is deceptive in several ways. Firstly, it states that the CFPB will propose rules this week to further rein in banks' ability to charge customers a fee when they overdraw their bank account. However, the article does not provide any information on what these proposed rules are or how they would affect consumers. Secondly, the article quotes President Biden saying that overdraft fees are just taking advantage of people and cites statistics showing that low-income households and minorities disproportionately incur these fees. However, it fails to mention that many banks have already implemented safeguards to prevent customers from going into negative balance or charge them a fee for non-sufficient funds. Lastly, the article mentions several examples of how overdraft fees can be charged on a customer's account and how much banks can charge relative to the amount of risk they are taking on to cover routine purchases. However, it does not provide any evidence that these practices are deceptive or harmful to consumers.
The article states that President Biden has placed overdraft fees at the center of a campaign against what he calls 'junk fees' and directed government regulators to do whatever is in their power to further curtail the practice. However, it does not provide any information on how these regulations would affect consumers or banks.
The article mentions that many banks have implemented safeguards to prevent customers from going into negative balance or charge them a fee for non-sufficient funds. However, it fails to mention that some smaller banks and credit unions heavily rely on overdraft fees for profit.
Fallacies
(85%)
The article contains several examples of informal fallacies. The author uses an appeal to authority by citing President Biden's statement that overdraft fees are 'junk fees'. This is not a logical argument as it does not provide any evidence or reasoning for why the president considers them junk fees. Additionally, the author uses inflammatory rhetoric when they describe banks charging customers a fee if their bank account balance falls below zero as taking advantage of people. The article also contains an example of dichotomous depiction by stating that overdraft started off as a courtesy offered to some customers but then became popular due to debit cards, leading Americans to wrack up tens of billions in overdraft fees. This creates a false binary between the two options and ignores other factors that may have contributed to the rise in overdraft fees.
The president considers overdraft fees 'junk fees'
Banks are taking advantage of people by charging customers an overdraft fee if their bank account balance falls below zero
Overdraft started off as a courtesy offered to some customers but then became popular due to debit cards, leading Americans to wrack up tens of billions in overdraft fees
Bias
(85%)
The article contains examples of bias in the form of monetary bias and religious bias. The author uses language that dehumanizes those who use overdraft fees as taking advantage of people. Additionally, the author cites statistics about how certain groups are more likely to be hit with overdraft fees, which could be seen as a form of discrimination.
The banking industry is gearing up to fight back with a multimillion-dollar marketing and lobbying campaign.
Site
Conflicts
Of
Interest (100%)
None Found At Time Of
Publication
Author
Conflicts
Of
Interest (50%)
The author has a conflict of interest on the topic of overdraft fees as they are reporting on banks and consumer financial protection bureau (CFPB) which may have an impact on their ability to report objectively.
The Consumer Financial Protection Bureau (CFPB) is proposing a rule that would curb excessive overdraft fees charged to customers of large banks and credit unions.
Customers are typically charged $35 for an overdraft loan, even though the majority of consumers debit card overdrafts are for less than $26, and are repaid within three days.
The CFPB estimates that roughly 23 million households a year pay overdraft fees and that the proposed rule could save each household $150 a year.
An overdraft fee is charged when the bank or credit union covers a deposit account holder's transaction even though there is not enough money in that person's account. The CFPB asserts that the overdraft coverage is in essence a loan to the customer and as such should be subject to the Truth in Lending Act.
The proposed rule would lower big banks and credit unions overdraft revenue further by requiring them to be as forthcoming about the terms of extending an overdraft loan as they are for other lending products. One option for financial institutions subject to the rule would be to offer customers overdraft protection as a line of credit tied to their checking account or debit card.
Accuracy
The rule would only apply to banks and credit unions with at least $10 billion in assets.
Customers are typically charged $35 for an overdraft loan, even though the majority of consumers' debit card overdrafts are for less than $26, and are repaid within three days.
Deception
(50%)
The article is deceptive in several ways. Firstly, the author uses sensationalism by stating that overdraft fees are a 'massive junk fee harvesting machine' which implies that banks and credit unions intentionally charge high fees to make profit. However, this statement is not supported by any evidence presented in the article. Secondly, the author quotes CFPB director Rohit Chopra saying that customers are charged $35 for an overdraft loan even though the majority of consumers' debit card overdrafts are for less than $26 and repaid within three days. This statement is misleading as it implies that banks charge a flat fee regardless of the amount borrowed, which is not true. Thirdly, the author uses selective reporting by stating that big banks have made many modifications to their overdraft practices effectively lowering their revenue but does not provide any details on these changes or how they were implemented. Lastly, the article fails to disclose sources and only quotes CFPB director Rohit Chopra.
The article fails to disclose sources and only quotes CFPB director Rohit Chopra
The author misleads readers by stating that customers are charged $35 for an overdraft loan even though the majority of consumers' debit card overdrafts are for less than $26 and repaid within three days
The author uses sensationalism by stating that overdraft fees are a 'massive junk fee harvesting machine'
Fallacies
(85%)
The article contains several fallacies. The author uses an appeal to authority by citing the Consumer Financial Protection Bureau (CFPB) as a source of information without providing any context or explanation for why this agency is relevant or trustworthy. Additionally, the author makes use of inflammatory rhetoric when describing overdraft fees as 'junk fee harvesting machines' and 'exploitation'. The article also contains an example of a dichotomous depiction by stating that too often bank customers are surprised by overdraft fees and those who can least afford them are charged the most frequently. This creates a false binary between being able to afford overdraft fees or not, ignoring other factors such as financial literacy or planning. The article also contains an example of inflammatory rhetoric when describing predatory overdraft fees as 'exploitation'.
The CFPB on Wednesday said it is proposing a rule that would curb excessive overdraft fees charged to customers of large banks and credit unions, potentially saving consumers as much as $3.5 billion a year.
An overdraft fee is charged when the bank or credit union covers a deposit account holder's transaction (e.g., payment, withdrawal, debit or transfer) even though there is not enough money in that person’s account. The CFPB asserts that the overdraft coverage is in essence a loan to the customer and as such should be subject to the Truth in Lending Act much the way credit cards are.
The proposed rule would lower that amount further by requiring big banks and credit unions to be as forthcoming about the terms of extending an overdraft loan as they are for other lending products.
Bias
(85%)
The article contains examples of religious bias and monetary bias. The author uses language that dehumanizes those who use overdraft fees as a way to make money off vulnerable customers.
> One option for financial institutions subject to the rule would be to offer customers overdraft protection as a line of credit tied to their checking account or debit card. Those lines of credit would charge a competitive interest rate.<br> > Very large financial institutions would still be able to offer profitable overdraft loans, as long as they comply with longstanding consumer protections on loans.
> The CFPB asserts that the overdraft coverage is in essence a loan to the customer and as such should be subject to the Truth in Lending Act much like credit cards are. But overdraft protection was treated as exempt from those disclosures.<br> > Today, big banks have made many modifications to their overdraft practices, effectively lowering their overdraft revenue to roughly $9 billion a year.
> Too often, the consumer watchdog agency has noted, bank customers are surprised by overdraft fees and those who can least afford them are charged the most frequently.<br> > What’s more, the agency estimates that roughly 23 million households a year pay overdraft fees and that the proposed rule could save each household $150 a year.
Site
Conflicts
Of
Interest (50%)
Jeanne Sahadi has a conflict of interest on the topic of overdraft fees as she is reporting for CNN which owns a significant amount of assets in the financial industry.
Author
Conflicts
Of
Interest (50%)
Jeanne Sahadi has a conflict of interest on the topic of overdraft fees as she is reporting for CNN which receives funding from big banks and credit unions.
Overdraft payment programs function as a kind of loan: If a customer spends more money than they have, they can elect for the bank to process the transaction anyway.
Consumers must pay back the remainder they owe, plus a fee which averages about $26 per overage nationally.
Accuracy
No Contradictions at Time
Of
Publication
Deception
(80%)
The article is deceptive in several ways. Firstly, the author uses sensationalist language such as 'junk fee harvesting machine' to describe overdraft fees which are a legitimate service provided by banks. Secondly, the author quotes industry lobbyists who oppose regulation without providing any context or disclosure of their affiliations with these groups. This is an example of selective reporting and bias towards the banking industry. Thirdly, the article presents statistics on overdraft charges generated in 2022 but does not provide any information about how much revenue banks have made from overdraft fees since then.
The article presents statistics on overdraft charges generated in 2022 but does not provide any information about how much revenue banks have made from overdraft fees since then. This is an example of selective reporting and bias towards the banking industry.
The author uses sensationalist language such as 'junk fee harvesting machine' to describe overdraft fees which are a legitimate service provided by banks. This is an example of deceptive language used to manipulate public opinion against the banking industry.
Fallacies
(80%)
The article contains several examples of inflammatory rhetoric and appeals to authority. The author uses strong language such as 'junk fee harvesting machine' and 'rip off hardworking Americans simply because they can'. Additionally, the CFPB director is quoted saying that overdraft fees are a problem for low-income Americans, which could be seen as an appeal to emotion rather than evidence of any specific issue. The article also mentions several examples of banks lowering their fees in response to political pressure and threats of legal action from industry lobbyists, suggesting that the CFPB's proposal is not based on objective analysis but rather influenced by external factors.
The author uses strong language such as 'junk fee harvesting machine'
The CFPB director is quoted saying that overdraft fees are a problem for low-income Americans
Several examples of banks lowering their fees in response to political pressure and threats of legal action from industry lobbyists
Bias
(85%)
The article contains examples of religious bias. The author uses the phrase 'junk fee harvesting machine' to describe overdraft fees which implies that they are unfair and unjustified. This is a clear example of language being used to demean one side as extreme or unreasonable.
The charges, historically have fallen the hardest on poor Americans while enriching major banks.
Site
Conflicts
Of
Interest (50%)
Tony Romm has a financial interest in the banking industry as he is reporting on their opposition to new regulations by the Consumer Financial Protection Bureau (CFPB) that aim to limit overdraft fees. He also mentions the $36 billion in revenue generated by the industry.
Author
Conflicts
Of
Interest (50%)
The author has a conflict of interest on the topic of bank overdraft fees as they are part of the financial industry that generates $36 billion in revenue from these fees.
The cost to overdraw a bank account could drop to as little as $3 under a proposal announced by the White House.
Banks charge customers an overdraft fee if their bank account balance falls below zero. Overdraft started as a courtesy offered to some customers when paper checks used to take days to clear, but proliferated thanks to the growing popularity of debit cards.
Under the proposed rule, banks could only charge customers what it would cost them to break even on providing overdraft services. This would require banks to show the CFPB the costs.
The nation's biggest banks still take in roughly $8 billion in overdraft fees every year, according to data from the CFPB and banks' public records.
President Joe Biden has made eliminating junk fees one of the cornerstones of his administration's economic agenda heading into the 2024 election. Overdraft fees have been at the center of that campaign.
The rules would apply only to banks with more than $10 billion in assets, which is roughly 175 banks that make up most of the financial institutions Americans do business with.
Accuracy
No Contradictions at Time
Of
Publication
Deception
(100%)
None Found At Time Of
Publication
Fallacies
(85%)
The article contains several fallacies. The author uses an appeal to authority by citing President Biden's statement without providing any evidence or context for his claim that banks charge exorbitant overdraft fees and exploit vulnerable Americans. Additionally, the author uses a dichotomous depiction of banks as either offering a service or engaging in exploitation, which oversimplifies complex issues and ignores nuances. The article also contains inflammatory rhetoric by using phrases such as
Bias
(85%)
The author demonstrates bias by using language that depicts banks as exploitative and overdraft fees as a junk fee. The author also uses phrases like 'exorbitant' to describe the cost of overdraft fees.
For too long, some banks have charged exorbitant overdraft fees – sometimes $30 or more – that often hit the most vulnerable Americans the hardest, all while banks pad their bottom lines. Banks call it a service – I call it exploitation.
The White House directed government regulators last year to do whatever is in their power to further curtail overdraft fees, which have been at the center of that campaign.
Site
Conflicts
Of
Interest (100%)
None Found At Time Of
Publication
Author
Conflicts
Of
Interest (50%)
The author has a conflict of interest on the topic of overdraft fees and exploitation of vulnerable Americans by banks. The article mentions that Truist Bank is one bank that charges $39 maximum fee for some customers.
