Banks Aggressively Push Overdraft Protection Plans

The Aug. 15 deadline is looming to choose whether or not to use your bank’s overdraft protection plan, and it appears that many banks are doing whatever they can to get customers to opt-in. The Center for Responsible Lending found that many banks are pressuring customers to opt-in to overdraft coverage.

In many cases, banks are targeting customers who frequently overdraw their accounts. Low-income individuals, people of color, and renters are more likely to be aggressively targeted by banks trying to get them to opt-in. Some banks are even providing inadequate or misleading information to consumers, such as failing to disclose lower-cost alternatives to overdraft fees.

According to the report, “Some financial institutions have adopted this targeted marketing approach. A credit union in Iowa, for example, is offering incentive-based pay to employees who can identify accountholders who have overdrawn their accounts when they walk into a branch and then convince them to opt in to debit card overdraft coverage.”

Consumers have received a variety of mailings, emails, phone calls, and other communications about overdraft protection plans. Some of the communications fail to inform banking customers of all their options, such as the fact that they can choose to have debit card transactions declined if they don’t have enough money in a checking account to cover them.

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