Rep. André Carson has signed on as an original cosponsor of the Overdraft Protection Act, a bill that codifies regulations that stop banks from charging overdraft fees unless consumers specifically request the coverage be provided. The bill also ensures that overdraft charges are reasonable and proportional to the overdraft amount.
According to a recent Pew study, 75 percent of individuals who have been charged overdraft fees would have preferred the bank to decline their transaction if their account lacked necessary funds. This study indicates that banks have not provided customers with adequate information regarding overdraft programs, and most consumers are unaware that the easiest way to avoid overdraft fees is not to opt into these programs at all.
Rep. Carson, who serves on the Committee on Financial Services, says passage of this bill would limit the number of high-cost, overdraft penalty fees accrued by the most vulnerable and least financially-capable Hoosier consumers.
"Countless Americans have been hit with unnecessary overdraft fees, and banks have profited at nearly $37 billion annually," Carson said. "Nobody should find out they've paid $35 for a cup of coffee because of a checkbook balancing error. Consumers must realize they have choices. "
Carson also offered that other steps must be taken in addition to the protections outlined in this bill, including strengthening young adult financial literacy.
He went on to say, "We must go further than providing protections and holding banks accountable; we must also ensure consumers receive the education necessary to recognize when they are being taken advantage of."
Carson is the author of H.R. 300, the Young Adults Financial Literacy Act, a bill that would provide grants to universities to fund partnerships with schools or non-profits to provide financial literacy education to students, ages 15-24.