That made Capital One, the sixth-largest retail bank in the United States, the first top ten bank to stop penalizing customers for withdrawing large amounts of cash or writing checks for more than they had in their accounts.
“Bank accounts are fundamental to one’s financial life,” said Richard Fairbank, Capital One CEO in a press release, adding that “Overdraft protection is a feature valuable feature and convenience and can be an important safety net for families.”
Advocacy groups hope that other banks will follow Capital One’s lead in eliminating these fees, which have been the money generators for companies hitting them.
Lauren Saunders, deputy director of the National Consumer Law Center, said in a statement from Capital One: “This move by Capital One will be of great benefit to the most vulnerable consumers. “It is important that we continue to work to make the banking system more inclusive and fair for all.”
“Instead of competing on quality of service and attractive interest rates, many banks have attracted overdraft fees to feed their profit model,” CFPB director Rohit Chopra said in a press release. “We will act to restore meaningful competition to this market.”
For its part, JPMorgan Chase said it has taken some action on overdraft fees and underfunding fees.
“The CFPB numbers do not reflect the changes we made earlier this year to our overdraft service, which has already helped 1.7 million customers,” said Elizabeth Seymour, a spokeswoman for the bank. customers, said in a statement to CNN Business.
“We’ve eliminated the underfunding fee and significantly increased the amount customers can overdraft before charging the overdraft fee,” added Seymour. “These changes reflect our ongoing efforts to deliver the best, most competitive products and services our customers desire.”
But one prominent analyst wrote that other banks could soon follow Capital One’s lead – otherwise risk being subject to even tougher restrictions by regulators.
“Our expectation is that many banks will try to avoid CFPB enforcement actions,” Jaret Seiberg of Cowen Washington Research Group said in a report.
“Enforcement actions are likely to begin next spring. Enforcement is the fastest way for the CFPB to try to change the behavior of the banking industry,” he added.
– Jeanne Sahadi of CNN Business contributed to this report.
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