Consumer Financial Protection Bureau building in Washington, D.C. Photo Credit: Diego M. Radzinschi/ALM

New York Attorney General Letitia James announced Tuesday that her office is leading a coalition of 25 state attorneys general “opposing any effort” by the Consumer Financial Protection Bureau to roll back or limit its national overdraft rule prohibiting banks from charging overdraft fees on ATM and one-time debit transactions unless consumers opt in to the institution's overdraft services.

In a July 1 collective letter sent by the 25 attorneys general to the protection bureau, the law enforcement leaders said in their conclusion section that they “urge the CFPB to keep the Overdraft Rule and to continue to vigorously enforce the Rule.”

They further stated that they “recommend that the CFPB consider expanding the Rule to checking and ACH transactions and to require that fees be proportionate to the amounts banks pay to cover overdraft transactions.”

In the same 10-page letter, of which James is the first signatory, the attorneys general explained that they are responding to the federal bureau's May-issued “Notice of 610 Review and Request for Comment” regarding whether “the Overdraft Rule should be continued without change, amended or rescinded.”

The bureau, in its publicly issued notice, stated that it is “conducting a review of the Overdraft Rule consistent with section 610 of the Regulatory Flexibility Act,” and that “as part of this review, the Bureau is seeking comment on the economic impact of the Overdraft Rule on small entities.”

The Flexibility Act, the notice explained, “requires each agency to consider the effect on small entities for certain rules it promulgates.”

In their letter, the 25 attorneys general pointed out that “we are aware of no evidence or other basis to believe that the Overdraft Rule places any economic burdens or costs on smaller financial institutions, or indeed on financial institutions generally.” They also wrote that the rule “merely requires all financial institutions that charge for overdraft services on ATM or one-time debit card transactions to disclose that fact clearly to customers in advance by presenting a one-page model disclosure form, minimizing the cost of compliance.”

James, in her news release Tuesday, used language sometimes stronger than the language used in the coalition's letter sent to the bureau.

She stated that any potential rollback of the rule, which went into effect in 2010, is opposed, and she emphasized that such a rollback may harm many people economically.

“If the CFPB rolls back this rule, it would put hard-working people in harm's way by allowing banks to charge more overdraft fees, all in the name of corporate greed,” James said in the release.

She added that “consumers across New York deserve the chance to make informed decisions about their finances, so I urge the CFPB to give them that opportunity and create a more efficient and fair marketplace.”

The New York Attorney General's Office's release also stated that the rule, when made, “recognized that many consumers received overdraft services by default, but were never given clear information about their options and the fees their financial institutions charge.”

“In fact, some studies released by the CFPB have shown that median fees can cost as much as 68-percent of median overdrafted transactions. For example, when the median overdrafted transaction was $50, the median fees charged were $34,” the release stated.

The CFPB on Tuesday did not respond to an email seeking comment on James' news release and the collective attorneys general's July 1 letter.