STAMFORD, Conn., Oct. 19 (UPI) -- U.S. Senate Banking Committee Chairman Chris Dodd, D-Conn., Monday unveiled legislation to rein in bank overdraft fees.
Dodd, appearing in Stamford, Conn., said the Fairness and Accountability in Receiving Overdraft Coverage Act would protect Americans from what he called excessive checking account overdraft fees.
Banks, he said, have hit consumers "with hundreds of dollars in penalties for overdrawing on their account by just a few dollars," and said that under the legislation, consumers would be given a choice of whether they want to enroll in bank "overdraft protection programs."
"Account holders are often enrolled in the programs without their consent and many banks will slap customers with fees of upwards of $30 for this 'courtesy' even if their account is only overdrawn by a few cents," Dodd said.
While some of the nation's largest banks have agreed to roll back some overdraft fees, The Wall Street Journal reported the proposed law takes a tougher stance by mandating banks to only impose fees that are "proportional" to the cost of processing the overdraft.
It also places limits on the number of fees that can be charged each month and year, the newspaper said.