On August 4, 2017, the Consumer Financial Protection Bureau (CFPB) released four “prototype” model overdraft disclosure forms styled under its “Know Before You Owe” initiatives with a press release. The CFPB said the forms were designed to clarify the risks and costs of overdraft coverage for consumers. The press release and forms were accompanied by a report entitled Data Point: Frequent Overdrafters (the “Report”), highlighting the habits of the small group of consumers who initiated the most overdrafts per year.
Similar in concept and design to the CFPB’s “Know Before You Owe Disclosures” for mortgages and prepaid accounts, the model form prototypes seek to simplify the current overdraft model disclosure form that financial institutions must provide before a consumer opts into the payment of overdraft fees on ATM and one-time debit card transactions, per Regulation E. The CFPB’s prototype forms seek to help consumers “evaluate the risks and benefits of opting-in.” However, the August 4 release does not request comments on the prototypes, which the CFPB says it is still “currently testing.
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