Maryland Legal Alert for Financial Services
CFPB Overdraft Fees Rule Repealed by CRA Resolution
On May 9, 2025, President Trump signed a Congressional Review Act (CRA) resolution repealing the Consumer Financial Protection Bureau’s (CFPB) final overdraft fees rule. The rule would have reclassified certain overdraft programs offered by large financial institutions (those with over $10 billion in assets) as credit products, subjecting them to the disclosure requirements of the Truth in Lending Act (TILA) and Regulation Z.
If implemented, the rule would have capped overdraft fees at $5, unless the financial institution could demonstrate that the fee was reasonably based on actual costs or chose to treat the overdraft as a loan and provide applicable disclosures. With the rule repealed, financial institutions retain broader discretion in structuring overdraft fee programs. However, the repeal does not eliminate all regulatory oversight. Financial institutions remain subject to the CFPB’s authority under the prohibition against unfair, deceptive, or abusive acts or practices (UDAAP), as well as potential state-level regulatory enforcement.
Practice Pointer: While the CFPB’s direct oversight on this issue has been curtailed, regulatory risk remains. Financial institutions should reassess and strengthen their UDAAP compliance frameworks and monitor for emerging state-level regulations.
For more information, contact Tamia J. Morris.