November 30, 2010

As financial institutions continue their campaigns to persuade consumers to agree to pay
steep fees for debit card overdrafts, we urge the National Credit Union Administration to
adopt stricter supervisory guidance to curb ongoing overdraft abuses.

We make the following specific recommendations:

• End excessive overdraft fees at NCUA-supervised credit unions:

• Require that any account holder who chooses overdraft coverage
receive the lowest-cost credit for which the account holder qualifies.

• Instruct credit unions not to charge more than six overdraft fees within
a 12-month period, consistent with the FDIC’s 2005 payday lending
guidelines.

• Prohibit all methods of transaction processing that increase overdraft fees.

• Take swift action to stop aggressive or deceptive practices aimed at
convincing customers to opt in:

• Review opt-in solicitation materials and practices at each examination
and intermittently.

• Provide examples of what constitutes “deceptive” opt-in solicitations.

• Prohibit credit unions from asking account holders more than once if
they want to opt-in.

• Assess disparate impact on communities of color.

• Require a “Schumer-box”-like disclosure of the comparative costs of
opting in to fee-based overdraft, other overdraft alternatives, and
declining to opt-in.

• Require periodic reporting of data on overdraft program activity,
particularly on those account holders incurring multiple fees.

To read entire letter, click PDF below.