15
over $15 ($5.77 in 1976 dollars);
24
by 2000, the average had surpassed $20 ($6.61 in 1976
dollars) and continued to increase thereafter.
25
As a result of these market shifts and operational changes, fee revenue from non-covered
overdraft credit began to significantly influence the overall business model for many asset
accounts. Financial institutions became less likely to charge consumers upfront monthly
checking account fees, which consumers could more easily compare across the market, and
instead began to rely heavily overdraft fees.
26
In essence, the provision of non-covered overdraft
credit moved away from its original purpose—paying occasional or inadvertent overdrafts as a
courtesy—and became the dominant component of a back-end pricing business model. By 2004,
marketwide overdraft revenue was estimated at approximately $10 billion and, by 2009, had
increased to an estimated $25 billion.
27
24
See Bank Fees Associated with Maintaining Depository, Checking, and Credit Card Accounts, Hearing Before the
Subcomm. on Consumer Credit and Ins., Comm. on Banking, Finance and Urban Affairs, 103rd
Cong. 73 tbl.3
(1993) (Testimony by Susan M. Phillips, Member, Bd. of Governors of the Fed. Rsrv. Sys.) (showing average
overdraft fee of over $15 in 1993); see also id. at 95-96, 101-02 (Statement of Chris Lewis, Dir. of Banking and
Hous. Pol’y, Consumer Fed’n of Am.) (noting concerns about the rise in the size of “bounced check fees”, a term
the organization used to describe the fee assessed when funds were insufficient, whether the transaction was
returned unpaid or paid into overdraft).
25
Gov’t Accountability Off., Bank Fees: Federal Banking Regulators Could Better Ensure That Consumers Have
Required Disclosure Documents Prior to Opening Checking or Savings Accounts, at 14 (Jan. 2008),
https://www.gao.gov/assets/gao-08-281.pdf; see also FDIC 2008 Study (by 2007, among primarily financial
institutions with less than $5 billion in assets, the average fee was $27); CFPB 2013 White Paper at 52 (by 2012,
among the nation’s largest financial institutions, the average fee was $34).
26
CFPB 2013 White Paper at 16-17.
27
CFPB’s estimates of marketwide overdraft revenue, before banks with over $1 billion in assets began reporting
overdraft/NSF revenue on call reports in 2015, are based on the esitmated share of aggregated fee revenue that banks
and credit unions reported on call reports that was attributable to overdraft fees. For more details on methodology,
see Jacqueline Duby et al., Ctr. for Responsible Lending (CRL), High Cost & Hidden From View: The $10 Billion
Overdraft Loan Market (May 26, 2005), https://www.responsiblelending.org/sites/default/files/nodes/files/research-
publication/ip009-High_Cost_Overdraft-0505.pdf; see also Leslie Parrish, CRL, Overdraft Explosion: Bank fees for
overdrafts increase 35% in two years, at 4 (Oct. 6, 2009), https://www.responsiblelending.org/research-
publication/overdraft-explosion-bank-fees-overdrafts-increase-35-two-years.